IDAFinancial Statements June 2011

International Development Association
Management’s Discussion & Analysis

and
Financial Statements
June 30, 2011
INTERNATIONAL DEVELOPMENT ASSOCIATION
MANAGEMENT’S DISCUSSION AND ANALYSIS

JUNE 30, 2011
Section 1: OVERVIEW OF FINANCIAL RESULTS 4
Section 2: DEVELOPMENT OPERATIONS 10

2.1 Commitments
2.2 Gross Disbursements
Section 3: DEVELOPMENT ACTIVITIES, PRODUCTS AND PROGRAMS 10

3.1 Introduction
3.2 Eligibility Criteria
3.3 Financing Principles
3.4 Financing Cycles
3.5 Financing Categories
3.6 IDA’s Policies for Poverty Reduction
3.7 Development Credits
3.8 Development Grants
3.9 Guarantees
3.10 Heavily Indebted Poor Countries (HIPC) Debt Initiative
3.11 Multilateral Debt Relief Initiative (MDRI
3.12 Crisis Response Window (CRW)
3.13 Trust Funds Administration
Section 4: FINANCIAL RESOURCES 16

4.1 Commitment Authority Framework
4.2 Donor Resources
4.3 Internal Resources
4.4 IBRD Transfers
4.5 IFC Grants
4.6 Other Transfers
Section 5: ALLOCATION OF RESOURCES 18

5.1 Performance Based Allocation (PBA) System
5.2 Country Performance Rating
5.3 Grant Allocations and Debt Cancellation
5.4 Exceptions to the PBA system
5.5 PBA System during IDA15
5.6 IDA16 Policy Framework
Section 6: MANAGEMENT OF INVESTMENT PORTFOLIO HOLDINGS 20
6.1 Introduction
6.2 Investment Policy Objectives
6.3 Minimum Liquidity Levels
6.4 General Investment Authorization
6.5 Liquidity Tranching
6.6 Short-term Borrowings
Section 7: FINANCIAL RISK MANAGEMENT 22

7.1 Introduction
7.2 Governance Structure
7.3 Risk Bearing Capacity
7.4 Funding Risk
7.5 Liquidity Risk
7.6 Credit Risk
7.7 Market Risk
Section 8: FINANCIAL RESULTS 27

8.1 Economic Environment
8.2 Condensed Net Income (Loss) Analysis
8.3 Condensed Balance Sheet Analysis
Section 9: CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES 29

9.1 Fair Value of Financial Instruments
9.2 Provision for HIPC Debt Initiative and MDRI
9.3 Provision for Losses on Development Credits and Other Exposures
Section 10: GOVERNANCE AND CONTROLS 30

10.1 General Governance
10.2 Audit Committee
10.3 Business Conduct
10.4 Auditor Independence
10.5 IDA Controls Review over Lending Operations
10.6 Internal Control over Financial Reporting
Glossary of Terms 33
LIST OF BOXES, TABLES AND CHARTS PAGE
Boxes
1 Four-Year Summary of Selected Financial Data 9
2 Financing Principles 11
3 IDA16 Policy Framework 19
4 Treatment of Overdue Payments 25
5 Eligibility Criteria for IDA’s Investment Securities 26
Tables
1 Summary of Repayment Terms for Development Credits, effective July 1, 2011 13
2 Cash and Investment Assets Held In Trust by IDA 15
3 Average Balances and Returns by Tranches 21
4 Short-term Borrowings 22
5 IDA Investment Credit Exposure by Counterparty Rating 26
6 Condensed Statement of Income 28
7 Condensed Balance Sheet 29
Charts
1 Commitments of Credits and Grants by Regions 10
2 Gross Disbursements of Credits and Grants by Regions 10
3 Share of Financing Categories 11
4 Performance Based Allocation System 18
5 Core Liquidity Component of Investment Portfolio 21
6 Finance Committee Governance Structure 23
7 Funding Risk 24
8 Liquidity Risk 24
Throughout Management’s Discussion and Analysis, terms in boldface type are defined in the Glossary of Terms.
The Management Discussion and Analysis contains forward looking statements which may be identified by such terms
as “anticipates”, “believes”, “expects”, “intends” or words of similar meaning. Such statements involve a number of
assumptions and estimates that are based on current expectations, which are subject to risks and uncertainties beyond
IDA’s control. Consequently, actual future results could differ materially from those currently anticipated.
2 IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011

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IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011 3

Section 1: Overview of Financial Results
Introduction
The International Development Association (IDA) is an international organization established in 1960 and is owned by its
member countries. It is the largest multilateral channel for providing concessional financing to the world’s poorest countries.
Since its inception it has played a pivotal role in the global aid architecture and in efforts to boost economic growth, lower
poverty and improve the living conditions of people. IDA pursues these goals by providing concessional development credits,
grants and guarantees to its recipient member countries to help meet their development needs. It also participates in programs
and initiatives including debt relief, and provides technical assistance and other advisory services to support poverty
reduction. Given its poverty focus, IDA directs a large share of its resources to countries where people earn less than two
dollars a day.
IDA’s financial statements are prepared in conformity with accounting principles generally accepted in the United States of
America (U.S. GAAP).
Sources and Uses of Funds
IDA’s lending, grant financing and guarantee activities are funded by donor and internal resources, and transfers and grants
from affiliated organizations. To compensate IDA for administrative expenses incurred, IDA charges 75 basis points as a
service charge on development credits outstanding. In addition, a commitment charge of between nil and 50 basis points per
annum, payable on the undisbursed amount of the development credits, may be set to cover administrative expenses. To the
extent that debt relief and grant financing reduces service charge income, donors compensate IDA for the forgone service
charge income. IDA’s sources and uses of funds are depicted in the chart below:
Sources and Uses of Funds
Sources of Funds Uses of Funds
Donor resources
Internal resources
Disbursement of credits and grants
Transfers and grants from

affiliated organizations
Service and commitment charge

income on credits, complemented by
donor compensation for forgone Administrative Expenses
service charge due to debt relief and
grant financing
Donor resources: Donors normally replenish IDA’s resources every three years through a new replenishment. These
resources are in the form of subscriptions and contributions with assigned voting rights. As of June 30, 2011, cumulative
subscriptions and contributions paid-in stood at $167,610 million.
Internal resources: These comprise contractual principal repayments (including any accelerated repayments and voluntary
prepayments), income from the investment portfolio, and interest income from blend and hard-term credits.
Transfers and grants from affiliated organizations: These comprise transfers from the International Bank for Reconstruction
and Development’s (IBRD) net income and grants from the International Finance Corporation’s (IFC) retained earnings. As
of June 30, 2011, cumulative amount received from such transfers and grants from IBRD and IFC was $13,495 million.

Funding and Liquidity Position
Maintaining an adequate level of funding resources and liquidity is essential for IDA’s operations, since it faces
timing mismatches between cash receipts from donors and the realization of internal resources, and the
disbursements of new credits and grants. The fact that IDA does not borrow from the capital markets even though it
is allowed to do so under its Articles of Agreement, makes it even more important that it has sufficient funding
resources and liquidity to meet its contractual obligations to disburse approved development credits and grants in a
timely manner.
Funding Position Liquidity Position

USD bIllions Months
50 16
45 14
40
12
35
30 10
25 8
20 6 Months of gross disbursements covered by Core
15 Undisbursed commitments of credits and grants 4 Liquidity
10
5 Investment portfolio and unrestricted demand notes 2
0 0
30-Jun-09 30-Jun-10 30-Jun-11 30-Jun-09 30-Jun-10 30-Jun-11
As of June 30, 2011, the investment portfolio and IDA’s investment portfolio consists of accelerated
unrestricted demand notes covered 77 percent of all encashment of donor contributions, lBRD transfers and
undisbursed commitments of development credits and IFC grants (Tranche 1) and a core liquidity component
grants. (Tranche 2 and 3), see Section 6.5. As of June 30, 2011,
core liquidity accounted for nearly nearly $12 billion,
comprising short-term and medium-term investments,
and was sufficient to cover nearly 14 months of average
monthly gross disbursements, based on FY 2011 volume.
Balance Sheet Analysis
Condensed Balance Sheets

In millions of U.S. dollars
As of June 30, 2011 2010 Variance
Assets
Investment assets including derivatives $ 32,479 $ 27,680 $ 4,799
Receivables, cash and derivatives relating to asset/liability management 11,382 5,549 5,833
Development credits outstanding 125,287 113,474 11,813
Less accumulated provision for debt relief and losses on development credits (6,947) (8,948) 2,001
Total assets $162,201 $137,755 $24,446
Liabilities and equity
Liabilities and derivatives relating to investments $ 7,607 $ 6,041 $ 1,566
Subscriptions and contributions paid-in 167,610 157,413 10,197
Demand obligations, payables and derivatives relating to asset/liability
management 8,286 3,206 5,080
Accumulated deficit (39,096) (36,764) (2,332)
Accumulated other comprehensive income 17,794 7,859 9,935
Total liabilities and equity $162,201 $137,755 $24,446
The principal components of IDA’s balance sheet are development credits outstanding, investment assets net of
liabilities, and subscriptions and contributions paid-in. Movements in these components between FY2010 and
FY2011 are presented on page 6.

Development Operations
Commitments
USD Mns
Commitments of development credits, grants and guarantees totaled
2010 12,180 2,370 $16,269 million in FY2011, an increase of $1,719 million (12%) over
the FY2010 commitments. The South Asia Region accounted for
most of this increase. The share of investment financing increased
2011 14,237 2,032
from 84% in FY2010 to 88% in FY2011.
0 5,000 10,000 15,000 20,000

Investment Development Policy
Gross Disbursements
USD Mns
The share of the faster disbursing development policy financing in
2010 8,232 3,228 gross disbursements decreased from 28% in FY2010 to 19% in
FY2011. This was reflected in the decline of gross disbursements of
credits and grants by $1,178 million (10%) between FY2010 and
2011 8,338 1,944
FY2011. Africa and the East Asia and Pacific Regions primarily
accounted for this decrease.
0 5,000 10,000 15,000
Investment Development Policy
Development Credits Outstanding

USD
Bns IDA’s principal assets are its development credits outstanding to its
130 borrowing member countries. Development credits outstanding
125 increased by $11.8 billion due to positive net disbursements of $5.5
120 billion and positive currency translation adjustment of $8.8 billion,
115
partially offset by development credits of $2.5 billion written off under
110
the Heavily Indebted Poor Countries (HIPC) debt relief initiative and
105
2010 2011 Multilateral Debt Relief Initiative (MDRI).
Investment Portfolio
USD
Bns
25
The increase in the net asset value of the investment portfolio of $3.2
20 billion was made up of a $2.2 billion increase in core liquidity and a $1
15 billion increase in Tranche 1. The share of core liquidity has remained
10 below 50 percent of the investment portfolio over the two years.
5
0
2010 2011
Core Liquidity Tranche 1
Subscriptions and Contributions Paid-In

USD
Bns Subscriptions and contributions paid-in increased by $10.2 billion
170 primarily due to $7.5 billion of demand notes received and $1.7 billion of
165 cash contributions.
160
155
150
2010 2011

Income Statement Analysis
Condensed Statements of Income

Expressed in millions of U.S. dollars
For the fiscal years ended June 30 2011 2010 Variance
Income
Income from development credits and guarantees $ 897 $ 837 $ 60
Investment income, net of interest expense 305 910 (605)
Transfers and grants from affiliated organizations and trust funds 991 990 1
Expenses
Administrative expenses (1,234) (1,150) (84)
Development grants (2,793) (2,583) (210)
Release of provision for debt relief and for losses on development credits and other exposures 44 90 (46)
Other, net 14 (1) 15
Effect of exchange rate changes on non-functional currencies (455) (167) (288)
Net unrealized losses on non-trading derivatives (101) (3) (98)
Net Loss $(2,332) $(1,077) $(1,255)
The key drivers of IDA’s net loss are the volume of development grants approved, the effects of interest rates,
sovereign credit risks, and exchange rates of non-Special Drawing Rights (SDR) component currencies. The
impact of these factors on IDA’s net results between FY2010 and FY2011 are discussed below.
Development grants
Development grants are expensed through the income statement and represent the most significant driver of IDA’s
net loss. The volume of development grants approved for any borrowing member country is dependent upon the
results of that country’s debt sustainability analysis. Most of the $210 million increase in development grants
expensed between FY2010 and FY2011 was allocated to the Africa region.
Effect of interest rates

IDA’s investment portfolio is sensitive to interest rates as a result of having a duration of more than two years as
part of its immunization strategy. The decrease of $605 million in net investment income was primarily driven by
lower effective yields, as well as lower returns on the euro holdings due to the steepening of the yield curve.
In addition, IDA also uses currency forward contracts to economically hedge those donor pledges which are
denominated in non-SDR component currencies. The fair value of these currency forward contracts is sensitive to
changes in interest rates as manifested in movements in the yield curve. The $98 million increase in the fair value
loss on non-trading portfolios is primarily due to the effect of the steepening of the euro yield curve on the
currency forward contracts.
Effect of sovereign credit risk
Changes to the existing provision for debt relief are primarily driven by the revision of the Decision and
Completion Point dates of the HIPC eligible countries. Changes to the provision for losses on credits and other
exposures are driven by changes in volumes, nonaccrual events, and the credit quality of the portfolio.
For FY2011, the net release of provision for debt relief and credit losses was due to the revision of Decision and
Completion Point dates for a number of HIPC eligible countries. This was partially offset by an increase in the
provision for losses on credits and other exposures due to volume changes. Similarly, during FY2010, the net
release of provision was due to the revision of Decision and Completion Point dates for a number of HIPC
eligible countries partially offset by an increase in the provision for losses on credits and other exposures due to
volume changes.
Effect of Exchange rates of non-SDRs component currencies

The payable leg of currency forward contracts economically hedging donor pledges are composed of non-SDR
component currencies. Appreciation (depreciation) of these currencies against the U.S. dollar results in exchange
rate losses (gains). The increase in exchange rate losses on non-functional currencies of $288 million was
primarily due to the significant appreciation of the majority of the non-functional currencies against the U.S. dollar
in FY2011 as compared to FY2010.
Other Factors
Administrative expenses: The increase of $84 million was primarily due to an increase in IDA’s share of total
expenses jointly incurred by IBRD and IDA, reflecting a higher proportion of IDA operations in FY2011 as
compared to FY2010.

Commitment Authority
IDA is a revolving concessional financing window with regular three-year replenishments by donors. The
resources available to IDA for funding its grant financing, lending and guarantee activities constitute its
commitment authority, which is measured in SDRs. As commitments for development credits and grants are
approved during the three-year replenishment period, the commitment authority is drawn down. These
committed funds are then disbursed over an extended period, generally eleven years. FY2011, ending on June 30,
2011, was the last year of the fifteenth replenishment of IDA’s resources.
The Sixteenth Replenishment of IDA’s Resources (IDA16)
In Billions of SDRs The Board of Governors adopted the resolution approving IDA16
on April 26, 2011. During the IDA16 period, which spans from
July 1, 2011 to June 30, 2014, IDA is expected to provide
Internal
Resources
concessional financing of SDR 32.8 billion ($52.5 billion1). The
9.7 chart provides a breakdown of the sources of funds for IDA16.
Donor
Donor pledges, including compensation for debt relief provided
contributions under MDRI, total SDR 21.1 billion ($33.7 billion), accounting for
21.1
Grants from 64 percent of total IDA16 funding. The next largest component of
IFC funding is from IDA’s internal resources which at SDR 9.7 billion
0.7
Transfers
from IBRD ($15.5 billion) accounts for 30 percent of the total. Internal
1.3 resources comprise the traditional repayments of credits as well as
for the first time, voluntary prepayments and accelerated
repayments from IDA graduate countries. IDA16 will become effective when IDA has received Instruments of
Commitment (IoC) for subscriptions and contributions from donors of not less than SDR 10.4 billion ($16.6
billion).
Advance Commitment Scheme under IDA16

In order to avoid an interruption in committing financing to eligible recipients pending the effectiveness of IDA16,
one third of IoCs received from participating donors will be available for new commitments starting July 1, 2011
under the Advance Commitment Scheme. In addition, in May 2011, the Executive Directors approved the use of
internal resources in the amount of SDR 9.7 billion ($15.5 billion) for new commitments starting July 1, 2011.
Composition of IDA16 Resources

Financial Reporting of Replenishment Resources
The recognition and reporting of replenishment resources in the financial statements are described below.
Donor resources: Donor pledges not represented by IoCs are not recognized on the balance sheet as they do not
meet the definition of an asset. The receipt of IoCs are reflected on IDA’s balance sheet as subscriptions and
contributions committed with an offsetting amount for subscriptions and contributions receivable. When IoCs are
encashed and or substituted by demand obligations, IDA recognizes these as subscriptions and contributions paid-
in.
Internal resources: To the extent that internal resources are represented by future repayments of credits, they are
already reported as part of the credits outstanding and once received, become part of the investment portfolio
pending future disbursement.
Transfers from IBRD and grants from IFC: These resources are recorded as income upon approval by IBRD’s
Board of Governors or upon execution of a grant agreement between IDA and IFC.
Investment income: The income from the investment portfolio which has been included as part of the various
components of replenishment resources, is only recorded when earned.
1
Using the June 30, 2011 exchange rate of 1 SDR = U.S. $1.6. Throughout the document, this exchange rate is used to translate any SDR
amounts relating to IDA16 to its U.S. dollar equivalent.

Box 1: Four-Year Summary of Selected Financial Data
As of or for the fiscal years ended June 30,
In millions of US dollars, except ratios and return data in percentages

2011 2010 2009 2008
Development Operations (Discussed in Section 2)

a
Commitments of credits, grants and guarantees $16,269 $14,550 $14,041 $11,235
of which development grants 2,822 2,678 2,600 3,216
Gross Disbursements 10,282 11,460 9,219 9,160
of which development grants 2,261 2,124 2,208 2,626
Net Disbursements including grants 7,781 9,111 7,010 6,978
Balance Sheet (Discussed in Section 8)

Total Assets $162,201 $137,755 $137,418 $141,450
Net Investment portfolio 24,872 21,639 21,287 19,053
of which core liquidity 11,987 9,811 8,594 5,364
Development credits outstanding 125,287 113,474 112,894 113,542
Undisbursed development credits 38,059 30,696 29,903 27,539
Development grants payable 6,830 5,837 5,652 5,522
Unrestricted demand obligations 9,610 6,993 8,398 8,004
Subscriptions and Contributions paid-in 167,610 157,413 150,085 142,416
Income Statement (Discussed in Section 8)

Net (Loss) Income (2,332) (1,077) 1,850 (283)
Income from development credits and guarantees 897 837 801 921
Investment income 320 921 1,623 1,396
Transfers and grants 991 990 1,037 1,104
Development grants (2,793) (2,583) (2,575) (3,151)
Administrative expenses (1,234) (1,150) (975) (888)
Provision for debt relief and losses on credits and other
exposures, decrease 44 90 1,236 773
Non-functional currency translation adjustment,
(losses)gains (455) (167) 859 6
Funding Position (Discussed in Section 7)

Investment portfolio and unrestricted demand notes as a
percentage of undisbursed commitments of credits and
grants payable 77% 78% 83% 82%
Liquidity Position (Discussed in Section 7)
Months of average monthly gross disbursements covered by

core liquidity 14 10 11 n.a.
a. FY2009 commitments of credits and grants include HIPC grants totaling $46 million.

Section 2: DEVELOPMENT Section 3: DEVELOPMENT ACTIVITIES,
OPERATIONS PRODUCTS AND PROGRAMS
A summary of the development operations for the 3.1 Introduction
last four fiscal years is included in Box 1.
IDA offers development credits, development
2.1 Commitments grants, and guarantees to its recipient member
countries to boost economic growth, lower poverty
Commitments of development credits and grants in
and improve the living conditions of its people. It
FY2011 reached $16,269 million, an increase of
also provides technical assistance, advisory and
$1,719 million (12%) over FY2010. In terms of
other services to support poverty reduction in these
regional focus, SAR alone registered an increase of
countries. In addition, IDA participates in a
$1,754 million. AFR and SAR together account for
comprehensive approach to reduce the external debt
82% of the FY2011 commitments (see Chart 1).
of the world’s poorest, most heavily indebted
Chart 1: Commitments of Credits and Grants by countries, by providing debt relief on their
Region outstanding debt to IDA, and has established
responses to provide assistance to low-income
USD Million countries against the impact of the global financial
FY 2010 FY 2011
8,000
crises.
7,000 IDA has a common framework which extends
6,000 across all of its development activities. The main
5,000 elements of this framework are eligibility criteria,
4,000 financing principles, financing cycles and financing
3,000 categories.
2,000
3.2 Eligibility Criteria
1,000
0 Two basic criteria govern a country’s eligibility for
AFR EAP ECA LCR MNA SAR IDA resources, namely: relative poverty defined as
gross national income (GNI) per capita below an
established threshold (updated annually), and lack
Regions:
AFR Africa EAP East Asia and Pacific
of creditworthiness to borrow from both
ECA Europe and Central Asia LCR Latin America and the Caribbean commercial sources and IBRD, and therefore a need
MNA Middle East and North Africa SAR South Asia
for concessional resources. As of July 1, 2011, 80
countries are eligible to borrow from IDA. Of these,
2.2 Gross Disbursements 65 are not considered sufficiently creditworthy to
Gross disbursements of credits and grants in FY2011 borrow from IBRD and are referred to as “IDA
were $10,282 million, a decrease of $1,178 million only” countries. The remaining 15 countries are
(10%) from FY2010. In terms of regional focus, deemed to have limited IBRD creditworthiness.
AFR and EAP accounted for $1,343 million of the These latter countries may receive both IDA and
decrease, while AFR and SAR accounted for 77% of IBRD financing and are referred to as “blend”
the total FY2011 gross disbursements (see Chart 2). countries. With a few exceptions, IDA’s eligibility
cutoff for FY2012 has been set at a GNI per capita
Chart 2: Gross Disbursements of Credits and in 2010 of $1,175 (the “operational cutoff”). The
Grants by Region operational cutoff for FY2011 was a GNI per capita
USD Million in 2009 of $1,165.
FY 2010 FY 2011
3.3 Financing Principles
8,000
7,000 IDA’s operations are required to conform to the
6,000 general principles derived from its Articles of
5,000
Agreement. These principles (which are described
in Box 2), taken together, seek to ensure that IDA
4,000
financing is made to member countries for
3,000
financially and economically sound purposes to
2,000
which those countries have assigned high
1,000 development priority, and that the financing is
0 utilized as intended. Within the scope permitted by
AFR EAP ECA LCR MNA SAR the Articles of Agreement, application of these
financing principles must be developed and adjusted
in light of experience and changing conditions.

3.4 Financing Cycles is generally used to procure goods, works and
services in support of economic and social
The process of identifying and appraising a project
development projects in a broad range of sectors. In
and approving and disbursing the funds often extends
contrast, development policy financing provides
over several years. However, on numerous
quick disbursing credits or grants to members with
occasions, IDA has shortened the preparation and
external financing needs to support structural
approval cycle in response to emergency situations,
reforms in a sector or the economy as a whole. They
such as natural disasters and financial crises. After
support the policy and institutional changes needed
appraisal of a project by staff, with certain
to create an environment conducive to sustained and
exceptions, IDA’s Executive Directors must approve
equitable growth. The share of investment financing
each development credit, development grant and
has increased from 76 percent in FY2008 to 88
guarantee. Disbursements are subject to the
percent in FY2011 as illustrated in Chart 3.
fulfillment of conditions set out in the credit or grant
agreement. During implementation of IDA-supported Chart 3: Share of Financing Categories
operations, staff review progress, monitor
compliance with IDA policies, and assist in resolving Percentage
Development Policy
Share Investment
any problems that may arise. An independent unit,
100%
the Independent Evaluations Group, assesses the
extent to which operations have met their major 80%
objectives, and these evaluations are reported
directly to the Executive Directors. 60%
3.5 Financing Categories 40%
IDA’s financing of its development operations in the 20%

form of development credits and grants falls into one
of two categories – investment financing or 0%
development policy financing. Investment financing FY 08 FY 09 FY 10 FY 11
Box 2: Financing Principles

(i) IDA may provide financing for its development operations in the form of development credits, development
grants, and guarantees directly to its members, public or private entities and regional or public international
organizations.
(ii) IDA’s financing of its development operations is designed to promote economic development, increase
productivity and thus raise standards of living in its member countries. Investment projects financed by IDA
are required to meet IDA's standards for technical, economic, financial, institutional and environmental
soundness. Specific provisions apply to development policy financing, including the treatment of the
macroeconomic framework, poverty and social impact, environment, forests and other natural resources.
(iii) Decisions to approve financing are based upon, among other things, studies by IDA of a member country's
economic structure, including assessments of its resources and ability to generate sufficient foreign
exchange to meet debt-service obligations.
(iv) IDA must be satisfied that in the prevailing market conditions (taking into account the member's overall
external financing requirements), the recipient would be unable to obtain financing under conditions which,
in the opinion of IDA, are reasonable for the recipient. This would include loans made by private sources or
IBRD.
(v) The use of funds by recipients is supervised. IDA makes arrangements intended to ensure that funds
provided are used only for authorized purposes and, where relevant, with due attention to considerations
of cost-effectiveness. This policy is enforced primarily by requiring recipients (a) to submit documentation
establishing, to IDA’s satisfaction, that the expenditures financed with the proceeds of development credits
or grants are made in conformity with the applicable financing agreements, and (b) to maximize
competition in the procurement of goods and services by using, wherever possible, international
competitive bidding procedures or, when it is not appropriate, other procedures that ensure maximum
economy and efficiency. In addition, under pilot programs approved by the Executive Directors, IDA
considers the use of recipient country procurement, and environmental and social safeguard systems in
selected operations where these systems are assessed by IDA as being equivalent to IDA's systems and
where the recipient’s policies and procedures, implementation practices, track record, fiduciary and
safeguard risks and capacity are considered acceptable to IDA.

3.6 IDA’s Policies for Poverty Reduction the beginning of each fiscal year. From FY2009 to
FY2012, IDA’s Executive Directors have
The Poverty Reduction Strategy (PRS) approach
maintained the commitment charge on undisbursed
followed by IDA is an important step in the
development credits at nil. Commitment charges are
evolution of the country-based development model
set having regard to the extent that service charges
which recognizes recipient country governments as
(adjusted to include income forgone from
the most important stakeholder, brings a clearer
development credits forgiven under HIPC and
focus on poverty reduction, emphasizes national
MDRI, and from providing grant financing) cover
ownership of the development effort, and creates
administrative expenses.
accountability for development results. Alignment
with the PRS is the cornerstone of IDA’s support to Interest. Interest will be charged on blend credits
the country-based development model with the approved under IDA16 and all hard-term credits.
Country Assistance Strategy (CAS) providing an The interest charged is more concessional than the
anchor for IDA’s support at the country level. prevailing IBRD lending rate with the actual rate
being determined on an annual basis, prior to the
The CAS facilitates alignment with country priorities
start of each fiscal year and applicable for all such
by taking into account national development
credits approved during a fiscal year. Table 1 shows
programs as well as harmonization with other donors
the rates for FY2012 and FY2011.
and World Bank Group (WBG) activities, thereby
maximizing impact. The CAS also makes it possible Repayment Terms
for IDA’s program to reconcile global concerns and
Development credits approved through June 30,
national priorities at the country level. Finally, IDA
1987 have a final maturity of 50 years, including a
provides support for the strengthening of national
grace period of 10 years. IDA credits approved up
capacities, including those for environmental and
to June 30, 2011 also have a grace period of 10
social safeguards, as well as public financial
years but the final maturity and repayment schedule
management and procurement.
depends on the eligibility of the recipient. Table 1
3.7 Development Credits provides a summary of the repayment terms of
development credits based on eligibility, effective
Currencies
July 1, 2011. Footnotes to Table 1 contain the terms
Currently, all development credits approved are existing for the three year period ending June 30,
denominated in SDRs. Before August 1, 1980, 2011.
development credits were denominated in U.S.
Lending Terms under IDA16
dollars. Currently, principal payments and service
Starting in IDA16, the terms for IDA’s blend credits
and commitment charges are due in the currency
and the hardened term credits of prior years are
specified in the Development Credit Agreement in an
combined into one instrument under the blend
amount equivalent to the SDRs required under the
eligibility criteria with a final maturity of 25 years
agreement.
with a 5-year grace period, and a 1.25 percent per
Charges on development credits annum interest rate. Hard term credits are also
harmonized with a maturity of 25 years and a 5-year
IDA’s policy is to maintain its charges (service and
grace period and continue to feature an interest rate
commitment charges) at a level that will cover its
which for FY2012 has been set at 2.8%. In addition,
administrative expenses. In addition, there is an
the terms for the small island country exception are
interest charge based on eligibility, the details of
changed from blend credit terms to regular credit
which are provided in Table 1.
terms. Access to hard term credits is expanded to all
Service Charge. A service charge is levied on the blend countries in proportion to their performance-
principal amount disbursed and outstanding on all based allocation.
development credits, regardless of repayment terms,
at the rate of 0.75% per annum. Development credits outstanding were at $125,287
million on June 30, 2011 ($113,474 million—June
Commitment Charge. A commitment charge between 30, 2010), an increase of $11,813 million (see
nil and 0.5% per annum is payable on the Section 8.3 Condensed Balance Sheet Analysis).
undisbursed amount of the development credit. The
Executive Directors set the commitment charge at

Table 1: Summary of Repayment Terms for Development Credits, effective July 1, 2011
Service
Eligibility Criteria Repayment Terms Interest
Charge
Not considered sufficiently creditworthy to 75 nil

borrow from IBRD or small island nations. basis
40 years including a
IDA Only For FY2012, “IDA-only” recipients had a points
grace period of 10 years.
2010 GNI per capita of $1,175 or less (the
‘operational’ cutoff).
c
Blend terms apply to both blend 75 1.25 %
borrowers and IDA countries with GNI per basis
capita above the operational cutoff for more points
Blend than two consecutive years, known a
grace period of 5 years.
previously as "gap" or "hardened term"
countries. Blend countries may receive
both IDA and IBRD financing.
d
A blend borrower will be eligible for an 75 2.8%
additional window of IDA lending at hard- basis
terms if its GNI per capita is below the b points
Hard-terms grace period of 5 years.
operational cutoff and if it has an active
IBRD lending program. Eligibility will be
determined annually.
a. 35-year maturity for blend borrowers, 20 years maturity for hardened term countries, including a grace period of 10 years
for credits approved during IDA15 which ended on June 30, 2011.
b. 35-year maturity including a grace period of 10 years for credits approved during IDA15 which ended on June 30, 2011.
c. Nil for credits approved during IDA15 which ended on June 30, 2011.
d. 3.20%, 3.52% and 3.20% for each of the three years FY2009 to FY2011 under IDA15.
3.8 Development Grants period. The amount available for each country is a
function of the country’s performance-based IDA
Commitment Authority for Funding of Grants
allocation (see Section 5 Allocations of Resources),
Only funds that are provided with specific grant and its eligibility for grants is based on an
authorization may be used to finance IDA grants.2 assessment of the risk of debt distress. Countries
Beginning with the transfer out of IBRD’s FY1997 with low risk of debt distress receive 100 percent of
net income, funds received from IBRD as net income their IDA allocation as development credits.
transfers have included explicit authority that the Countries with medium risk of debt distress receive
funding could be used for grants. Recent 50 percent of their IDA allocation as development
replenishment resolutions have authorized the credits, and the other 50 percent as grants. Countries
financing of grants from donor resources. In with high risk of debt distress will receive 100
addition, all grants received from IFC’s retained percent of their allocation in the form of grants.
earnings have also included the explicit authorization
Commitments and disbursements of development
that IDA could use such funding for grants.
grants during the last four fiscal years are provided
Commitment charges on the undisbursed balances of in Box 1.
grants are set annually by the Executive Directors of
3.9 Guarantees
IDA. From FY2003 through FY2012, IDA’s
commitment charge on the undisbursed balances of When IDA issues a guarantee, it obtains a counter-
grants has been set at nil. guarantee from the host government. If the
guarantee is called, IDA pays the project lenders.
Allocation of Grants
Without limiting its rights under the counter-
Grants in IDA15 were available solely for IDA-only guarantee (indemnity) agreement, IDA takes into
countries. This will continue during the IDA16 account all relevant circumstances in deciding
whether or not to exercise its right to demand
compensation from the host government under the
2 IDA’s Articles of Agreement (Article V, Section 2(a)) state,
“financing by the Association shall take the form of loans.” counter-guarantee, and what form the compensation
IDA may provide financing in different form, such as grants will take (for example, whether it will be a cash
and guarantees, only if the funds for such financing are settlement or converted into a credit to be repaid
accompanied by express advance authorization for such over time). IDA currently offers partial risk
other form of financing. The restriction also applies to
“funds derived therefrom as principal, interest or other guarantees.
charges,” i.e., reflows.

Instrument Type and Project Eligibility 3.10 Heavily Indebted Poor Countries (HIPC)
Debt Initiative
Partial risk guarantees are offered by IDA to cover
private lenders or investors through shareholder The HIPC Debt Initiative is a comprehensive
loans, against the risk of a government (or approach to reduce the external debt of the world’s
government-owned entity) failing to perform its poorest, most heavily indebted countries, and it
contractual obligations with respect to a private represented an important step forward in placing
project, and where official agencies and the private debt relief within an overall framework of poverty
market currently offer insufficient insurance reduction. The countries that qualify for HIPC
coverage. Management maintains a program ceiling assistance are the poorest countries that are eligible
on IDA guarantees for risk management purposes, for highly concessional assistance from IDA and
which is set at $1.5 billion. from the International Monetary Fund’s (IMF)
Poverty Reduction and Growth Facility. The list of
Partial risk guarantees can cover up to 100 percent of
countries potentially eligible under the Enhanced
the principal and interest of a private debt tranche for
HIPC Framework has been limited, whereby no
defaults arising from specified sovereign risks,
new countries are considered for eligibility unless
including but not limited to: (i) breach of contract;
they meet the income and indebtedness criteria as of
(ii) currency non-convertibility and non-
end calendar year 2004 as specified in the Initiative.
transferability; (iii) changes in law; and (iv)
expropriation and nationalization. Implementation mechanisms of the Enhanced HIPC
Framework include: (i) partial forgiveness of IDA
Partial risk guarantees are available in selective cases
debt service as it comes due, and (ii) in the case of
in IDA-only countries where an IBRD Enclave
countries with a substantial amount of outstanding
Guarantee3 is not applicable and in blend countries
IBRD debt, partial refinancing by IDA resources
which do not have access to IBRD funding due to
(excluding transfers from IBRD) of outstanding
creditworthiness constraints.
IBRD debt.
Guarantee Pricing
A provision is initially recorded for all of the
Standard charges consist of an annual guarantee fee estimated probable write-offs of development
of 0.75% on IDA’s maximum exposure4 under the credits outstanding under the HIPC Debt Initiative,
guarantee and an annual standby fee or commitment based on projected Decision and Completion Point
charge which is set to match the level of dates. This provision is included as part of the
commitment charges applicable for IDA credits at accumulated provision for debt relief and losses on
the time of guarantee approval (nil for both FY2011 development credits as reported on the balance
and FY2012). The guarantee fee and the standby fee sheet. As borrowers continue to service the eligible
are payable either periodically in installments or in a development credits until these projected dates are
single upfront payment, on a present-value basis. In reached, changes to these initially projected dates,
addition, IDA charges a one-time initiation fee of result in a revision to the provision estimates.
0.15 percent or $100,000 (whichever is higher) and a
Donors compensate IDA on a “pay-as-you-go”
processing fee of up to 0.50 percent of the principal
basis to finance IDA’s forgone credit reflows under
amount of the guarantee for all private sector
the HIPC Debt Initiative. This means that for the
borrowers. The processing fee is determined on a
debt relief provided by writing off the principal and
case-by-case basis and can either be waived or
charges during a replenishment, the donors
increased in exceptional cases.
compensate IDA for the forgone reflows through
Guarantees Exposure additional contributions in the relevant
replenishment and these are recorded in IDA’s
IDA’s exposure on its guarantees (measured by
balance sheet as subscriptions and contributions.
discounting each guaranteed amount from its first
call date) is $240 million at June 30, 2011 ($237 During FY2011, $15 million of development credits
million - June 30, 2010). For additional information and $3 million of charges were written off as debt
see the Notes to Financial Statements–Note E– relief under the partial forgiveness of debt service as
Development Credits and Other Exposures. it came due. During FY2010, the comparable
amounts were $48 million and $5 million
respectively. On a cumulative basis $2,077 million
of development credits and $327 million of charges
3 IBRD Enclave Guarantees are partial risk guarantees have been written off as of June 30, 2011.
structured for export-oriented commercial projects in IDA-
only countries that generate foreign exchange.
4 IDA’s maximum exposure to a borrower’s risk under a
guarantee is defined in a manner similar to disbursed
credits, i.e., as the full value of the disbursed and
outstanding balance under the guarantee financing.

3.11 Multilateral Debt Relief Initiative (MDRI) Committee to explore the benefits of a new crisis
response mechanism to provide assistance to low-
The MDRI provides additional debt relief through
income countries. As of June 30, 2011 a total of
100 percent cancellation of eligible debt owed to
SDR 923 million ($1,477 million) has been
IDA, the African Development Bank and the IMF by
committed under the pilot window.
countries that reach the HIPC Completion Point.
The objectives of MDRI are twofold: deepening debt For IDA16, a dedicated CRW has been established
relief to HIPC countries while safeguarding the long- with resources capped at 5 percent of the total
term financial capacity of IDA and other IDA16 replenishment resources, with donors
participating multilateral institutions; and providing SDR 1,335 million ($2,137 million). The
encouraging the best use of additional donor CRW provides IDA with added flexibility with
resources for development, by allocating them to which to respond to crises and emergencies, and to
low-income countries on the basis of policy do so in a manner that is both transparent and
performance. predictable. To meet these objectives, CRW
resources should only be accessed after an
A provision is initially recorded for all of the
exogenous shock such as a major natural disaster or
estimated probable write-offs of eligible
a severe economic shock. Financing from the CRW
development credits outstanding for debt relief to be
would form part of a concerted international
delivered under the MDRI based on projected
response and would only be accessed as a last
Completion Point dates. This provision is included as
resort.
part of the accumulated provision for debt relief and
losses on development credits as reported in the 3.13 Trust Funds Administration
balance sheet. As borrowers continue to service the
IDA, alone or jointly with one or more of its
eligible development credits until the Completion
affiliated organizations, administers on behalf of
Points are reached, changes to the initially projected
donors, including members, their agencies and other
dates, result in a revision to the provision estimates.
entities, funds restricted for specific uses in
The eligible development credits are written off
accordance with administration agreements with
when a country reaches its Completion Point and
donors. These funds are held in trust and are not
the related provision reduced accordingly. Donors
included in the assets of IDA. The cash and
have agreed to compensate IDA on a dollar-for-
investment assets held in trust by IDA as
dollar basis, for forgone credit reflows due to debt
administrator and trustee at June 30, 2011 and June
cancellation under the MDRI. The value of the
30, 2010 are summarized in Table 2. IDA’s
compensation is reassessed every three years,
contribution to these fiduciary assets for the year
normally at the time of regular IDA replenishment.
ended June 30, 2011 and June 30, 2010 was nil.
In this context, donors have agreed to provide IDA
with additional resources of SDR3.5 billion ($5.6 Table 2: Cash and Investment Assets Held In
billion) so as to cover debt relief costs due to MDRI Trust by IDA
during the IDA16 disbursement period. The donor In millions of U.S. dollars
compensation received is recorded in the balance Total fiduciary assets
sheet as subscriptions and contributions. June 30, June 30,
2011 2010
As of June 30, 2011, donor commitments to the Jointly administered with
MDRI stood at $30,238 million at the agreed affiliated organizations $ 547 $ 520
replenishment foreign exchange reference rates, Administered by IDA
IDA-executed 60 51
representing 85% of the total financing requirements,
Recipient-executed 2,409 2,169
based on the updated cost estimates for the MDRI as Financial intermediary funds 1,224 1,138
a
of June 30, 2010. Execution not yet assigned 3,756 3,706
Total $7,996 $7,584
During FY2011, $2,464 million of eligible
development credits were written off as debt relief as a. These represent assets held in trust for which the
a result of Liberia, Democratic Republic of Congo, agreement as to the type of execution is to be finalized
Togo and Guinea-Bissau reaching their respective jointly by the donors and IDA.
Completion Points. On a cumulative basis, $36,992 During the fiscal year ended June 30, 2011, IDA, as
million of development credits have been written off executing agency, disbursed $288 million ($264
under the MDRI as of June 30, 2011. million—fiscal year ended June 30, 2010) of trust
3.12 Crisis Response Window (CRW) fund program funds. For additional information, see
the Notes to Financial Statements-Note G-Trust
On December 10, 2009, IDA’s Executive Directors Funds Administration.
approved a pilot CRW for the remainder of the
IDA15 period, as a first phase response to recent
requests by the G-20 and the Development

Section 4: FINANCIAL RESOURCES Scheme. This scheme allows IDA to
continue making new lending commitments
4.1 Commitment Authority Framework without waiting for the new replenishment
The resources available to IDA for funding its to become effective. The Advance
lending activities constitute its commitment Contribution Scheme lapses once the new
authority. IDA finances its credit, guarantee and replenishment becomes effective.
grant commitments primarily from contributions (c) Replenishment Effectiveness. The effective
from donor countries. Additional funds come from date of a replenishment occurs when IDA
IDA’s internal resources, including reflows receives IoCs from donors whose aggregate
(repayments of principal on outstanding credits), contributions account for not less than the
investment income, transfers by IBRD out of its net amount defined in the Replenishment
income, and grants as designations out of IFC Resolution. IDA16 will become effective
retained earnings. Since IDA’s lending is highly when IDA has received IoCs for
concessional, its resources are periodically subscriptions and contributions from donors
replenished. Since its inception, IDA’s resources of not less than SDR 10.4 billion ($16.6
have been replenished sixteen times (including billion).
IDA16), complemented by an additional
replenishment agreed in 2006 for financing the (d) Commitment Authority. Donor
MDRI. contributions become available for
commitment in three equal tranches. Part of
Starting from FY1989, the Executive Directors the first tranche becomes available for
authorized IDA to make advance commitments commitment under the advance contributions
against future reflows and other internal resources. scheme and the remainder of the first tranche
The Advance Commitment Scheme5 was established becomes available upon effectiveness of the
in recognition of the fact that credits disburse over replenishment provided that donors have
several years and therefore cash in hand is not submitted unqualified IoCs. The second and
needed at the time of commitment.6 third tranches are subsequently released for
4.2 Donor Resources commitment on the dates specified in the
Replenishment Resolution.
Replenishment Process
(e) Payment of Contributions. Typically, donor
Donors normally replenish IDA’s resources every contributions are made in cash or non-
three years. The regular replenishment process has interest bearing demand notes, on specific
several steps: dates in three equal annual installments.
(a) Replenishment Discussions. These include (f) Encashment. Donor contributions which are
meetings between IDA’s management and paid by non-interest bearing demand notes
donor country representatives, called IDA are drawn down, on an approximately pro-
Deputies. Issues discussed include the size of rata basis among donors, in accordance with
the replenishment, relative burden-sharing the agreed encashment schedule. IDA16 has
among donors, and the policy framework for a nine-year encashment schedule. A discount
the replenishment. Contributions are may be provided for cash payments based on
negotiated in SDR terms, and translated into an accelerated schedule rather than the
national currencies using an average exchange standard replenishment schedule. The
rate, agreed upon early in the replenishment amount of discount is calculated so that the
process. net present value of cash payments made
(b) Advance Contribution Scheme. To avoid according to the revised schedule is equal to
disruption to IDA programs at the start of a the net present value of the cash payments
new replenishment, donors have the option under the encashment schedule agreed for in
of participating in an Advance Contribution the replenishment.
Members’ Voting Rights
5 Credits, which disburse over several years, do not have to be
fully cash funded at the time of their approval by the IDA allocates votes to its members in two ways.
Executive Directors. This allows donor contributions to be Membership votes are allocated equally among
encashed over several years and internal resources to be members, and subscription votes are allocated in
committed in advance of their anticipated receipt.
6 To determine the appropriate level of internal resources
relation to a member's initial and subsequent
during a replenishment period, long-term financial subscriptions and contributions. The key rules
projections are used to manage IDA’s cash flows on a going governing the voting rights system are as follows:
concern basis, under a set of underlying assumptions
relating to future lending volumes and the level of future
donor contributions.

 The voting power of each Part I member encashment of these contributions. This currency
reflects its share of total cumulative financial risk is addressed in Section 7.7 Market Risk.
contributions to IDA by all Part I members,
Delays in the timing of encashment affect IDA’s
plus its original membership votes;
liquidity. If encashment delays occur, IDA may
 Part II members can maintain their relative agree with the donor on a revised encashment
voting power by making subscriptions at schedule that yields at least an equivalent value.
nominal cost7 and in national currency; and Another risk is the potential for delays in declaring
effectiveness of a replenishment due to a delay in
 Part II members providing IDA with receipt of IoCs. It is only upon the effectiveness of
additional resources “in usable form”8 receive a replenishment that donor contributions become
the same increase in voting power that Part I payable to IDA.
members receive for their contributions. After
donor negotiations for a replenishment are 4.3 Internal Resources
completed, subscriptions are allocated to non- IDA’s internal resources include reflows (principal
donor Part II members to provide them the repayments and prepayments), interest on blend and
opportunity to maintain their relative voting hard term credits, investment income, a portion of
power. the liquidity portfolio, and residual resources from
Both Part I and Part II members receive additional past replenishments that become available to IDA
membership votes when they make additional during the replenishment period. Repayments and
subscriptions. The distribution of membership votes prepayments of outstanding credits constitute the
helps smaller members and the Part II members as largest component of internal resources.
a group, to maintain their relative voting power. Risks Associated with Internal Resources
Enhancing Part II Member Voting Power Under the Advance Commitment Scheme, IDA
Raising actual Part II voting power in IDA was one makes commitments against projected levels of
of the goals of a package of reforms, agreed by the internal resources over the disbursement period of
Development Committee in 2008, aimed at these commitments. The level of reflows would be
enhancing the voice and participation of Developing affected if recipients were to fall behind in their
and Transition Countries (DTC) in the World Bank. debt service. Furthermore, the level of investment
income varies with movements in market interest
To achieve this voting power increase, a number of rates. It is therefore essential to ensure that
Part II members took up to their allocated but resources are available to fund disbursements when
unsubscribed IDA subscriptions. In addition, four they are needed. To monitor this risk, IDA’s
donors contributed US$ 6.1 million through the management reviews the level of commitment
Voice Trust Fund (VTF) to assist 49 of the poorest authority regularly and provides an annual report to
Part II members take a portion of their outstanding IDA’s Executive Directors.
subscriptions. Including the effect of the VTF and
subscriptions taken up by individual countries, Part II 4.4 IBRD Transfers
members’ voting power as at June 30, 2011 stands at Since 1964, IDA has received regular financial
45.89%. support towards its replenishment resources, from
Risks Associated with Donor Resources IBRD in the form of direct transfers out of IBRD’s
net income. The IDA15 financing framework
IDA experiences foreign currency exposure due to included IBRD transfers of $1,750 million, all of
currency mismatches between its disbursement which has been received resulting in cumulative
obligations for credits and grants denominated in transfers received from IBRD of $11,595 million, as
SDR and donor contributions denominated in of June 30, 2011.
national currencies. Exchange rate fluctuations will
alter the SDR value of donor contributions from the The IDA16 financing framework includes an
time of commitment by donors until the actual indicative amount of IBRD cash transfers of $1,824
million. Depending first on IBRD fulfilling its
reserve retention needs, it is expected that this
7 The nominal cost of one subscription vote was set at U.S$80 amount will be allocated in three installments
(1960 gold dollars) for the third replenishment, and U.S$25 during fiscal years 2012, 2013 and 2014. Each
(current dollars) in the subsequent replenishments. The installment is required to be approved annually by
effective cost of a vote for Part I members has grown from
about U.S$9,900 under the third replenishment to about IBRD’s Board of Governors. If approved, each
U.S$16,600 under IDA16. installment is expected to be drawn down by IDA
8 Resources are deemed to be “in usable form” if they are immediately. The proposed transfer to IDA in
provided in “freely convertible currency” as defined in FY2012 would be net of the $75 million grant from
Article 2, Section 2(f) of IDA’s Articles of Agreement or in
local currency available for financing in the donor country. IBRD to the South Sudan Transition Trust Fund.

This grant was approved by IBRD’s Board of countries included a base allocation of SDR 4.5
Governors on July 20, 2011. million per country (or SDR 1.5 million annually)
for IDA15, which benefited small states in
In addition, IBRD contributed $2,330 million to the
particular. Starting in IDA16, the base allocation per
Debt Relief Trust Fund which were subsequently
country has increased to SDR 9 million per
transferred to IDA to compensate it for debt relief
replenishment (or SDR 3 million annually), in order
costs incurred under the HIPC Debt Initiative.
to better meet the fixed costs of country engagement
4.5 IFC Grants and maintain an effective country program.
Since 2006, IDA has received financial support Chart 4: Performance Based Allocation System
towards its replenishment resources from IFC in the
form of grants out of its retained earnings. The
IDA15 financing framework included $1,750 million Country Policy &
Institutional Assessments
Portfolio Performance
Rating
as IFC grants to IDA all of which has been received (CPIA) (PPR)
92% 8%
resulting in cumulative transfers of $1,900 million,
as of June 30, 2011.
The IDA16 financing framework includes an
indicative amount of $1,000 million in cash as
Country
designations out of IFC’s retained earnings for grants Performance
to IDA. These grants are to be used by IDA for Rating
(CPR)
sectors and themes that contribute significantly to Population GNI per Capita
private sector growth and economic development in
countries that are members of both IFC and IDA.
These grants will be spread across three installments
for fiscal years 2012, 2013 and 2014. The
installments are subject to availability of funds and Grant Allocations & IDA
Exceptions
annual approval, and are recognized upon IDA and Debt Cancellations Country Allocations
IFC signing the respective grant agreements.
4.6 Other Transfers
Under agreements governing the administration of Base Allocation
certain trust funds, IDA may receive surplus assets as
transfers upon the termination of these trust funds. In
addition, as development credits are repaid to trust 5.2 Country Performance Rating
funds, in certain cases the repaid funds are Under the PBA system, individual country
transferred to IDA. Given the small size and the allocations are derived substantially from Country
unpredictable timing of these transfers, they have not Performance Ratings (CPR), population and, to a
been included as part of any replenishment lesser extent, GNI per capita.
resources. However, these transfers as received have
added to IDA’s equity. The CPRs are assessed annually using a weighted
combination of two elements:
Section 5: ALLOCATION OF
(a) Country Policy and Institutional Assessments
RESOURCES (CPIA), conducted annually by IDA to assess
5.1 Performance Based Allocation (PBA) the quality of each country’s policy and
System institutions for fostering sustainable growth,
poverty reduction, and ability to effectively
A key concern for IDA is inequitable allocation of use development assistance. The CPIA
resources to recipients given that special priorities of assesses each country’s policy and
poverty reduction may be in force during a particular institutional framework and consists of
replenishment period. This risk of inequitable defined criteria grouped into four equally
allocation is managed by allocating the bulk of weighted clusters: (A) economic
IDA’s resources among eligible countries using the management; (B) structural policies; (C)
PBA system (see Chart 4). Under the PBA system, policies for social inclusion and equity; and
one country’s gain in terms of more allocations (D) governance, public sector management
would mean availability of fewer resources for others and institutions. Clusters A to C carry a
for a given level of the resource envelope. It has weight of 24 percent, while D carries a
evolved over time with modifications and weight of 68 percent. These weights reflect
enhancements being incorporated at successive the importance placed on governance for
replenishments including IDA16. The PBAs for all

development and on mitigating fiduciary risks options. These are known as capped-blend
to aid funds. countries.
(b) The Portfolio Performance Rating (PPR)  Countries emerging from severe conflict can,
which is reviewed annually, captures the under certain conditions, be provided with
effectiveness of IDA-financed projects and additional resources in support of their recovery
programs based on the percentage of actual and in recognition of a period of exceptional
IDA problem projects in a given country. PPR need.
carries a weight of 8 percent in calculating the
CPR.  Exceptional allocations are provided for
countries re-engaging with IDA after a
5.3 Grant Allocations and Debt Cancellation prolonged period of inactivity on the basis of a
Before arriving at a country’s final allocation, strong transitional plan with concerted donor
adjustments are made for any grant allocations to that support.
country. In addition, for those countries eligible for  Exceptional allocations may also be provided to
debt cancellation under the MDRI, the debt service IDA countries in the aftermath of severe natural
due in the relevant fiscal year is netted against that disasters or economic crises from the CRW,
year’s allocation. where the existing allocations would not allow
5.4 Exceptions to the PBA system for a sufficient response.
A number of specific exceptions to the PBA system  Lastly, there is a special provision for selected
have been agreed upon. These include: regional integration projects, which began as a
pilot program in IDA13. The IDA16 period
 Certain blend countries with access, or potential envisages up to SDR 500 million per year for
access to IBRD loans receive less than their such projects in topping up resources.
allocation norms due to their broader financing
Box 3: IDA16 Policy Framework
 The results measurement system is expanded into a four-tier system with a more extensive set of
indicators, including those in the two new tiers tracking IDA’s operational and organizational
effectiveness (IDA Report Card).
 Four special themes will be emphasized in IDA operations: crisis response, fragile and conflict-
affected countries, gender, and climate change.
 A dedicated Crisis Response Window is established to provide IDA with additional flexibility to
respond to severe economic crises and major natural disasters.
 The terms of IDA’s assistance will be adjusted to increase differentiation between IDA-only countries
and gap and blend countries and improve IDA’s long term financial sustainability.
 IDA allocations at the country level will continue to be determined by IDA’s PBA system.
 The resource allocation system is largely maintained, with some fine tuning to increase support to
small states and post-conflict and re-engaging countries.
 The grants framework is maintained as the basis for determining the terms of IDA assistance.
Areas of change that require focus include:
 Country Assistance Strategies will be expected to better integrate all sources of World Bank financing
(including trust funds), mainstream climate change and gender, and emphasize strengthening country
systems, including statistical capacity.
 Projects will need to integrate implementation arrangements into government systems, strengthen
results framework and, where appropriate, integrate gender and climate change, incorporate poverty
and social impact analysis, and ensure further progress in the implementation of the good practice
principles on conditionality.

5.5 PBA System during IDA15 projected to cover IDA’s administrative
expenses in a given year, complemented by
During the IDA15 period the PBA system has
donor compensation for forgone charge
continued to balance performance with needs by
income due to debt relief and grant financing.
allocating, consistent with performance, about 50
percent of resources to Sub-Saharan Africa, the
 Use of various hedging strategies to
region with the greatest need for IDA resources. 66
minimize currency mismatches of cash
percent of the IDA15 resources was allocated
flows.
through the core PBA system, with exceptions
accounting for the remaining 34 percent. Beyond these practices, IDA needs to be able to
address any unexpected demands on its core
5.6 IDA16 Policy Framework
liquidity by maintaining a sufficient level of liquid
During the IDA16 period, IDA will be guided by the assets.
policy framework outlined in Box 3. This policy
6.2 Investment Policy Objectives
framework was agreed upon during the IDA16
discussions and sharpens the focus on results and IDA is not a market-based financial entity, and does
strengthens and fine tunes the policy framework put not access the capital markets for long-term funds.
in place during previous replenishments. Therefore, IDA’s primary objective in the
management of its liquid assets is to ensure that
Section 6: MANAGEMENT OF funds will be available on a timely basis in the
INVESTMENT PORTFOLIO HOLDINGS amount needed to meet future cash flow
6.1 Introduction requirements, including disbursements for
development credits, grants and administrative
In equilibrium, cash inflows and outflows would expenses. Consistent with the primary objective,
match in any given year, leaving the balance of the IDA also seeks to maximize returns, subject to loss
investment portfolio unchanged. In practice, constraints, to generate investment income, which
however, IDA faces timing mismatches between can be added to IDA’s internal resources. See Box 5
cash receipts from donors and recipients and for the range of instruments permitted for
disbursements of new credits and grants. To manage investments under the existing General Investment
these timing mismatches between cash inflows and Authorization for IDA.
outflows, and to ensure optimal use of development
resources, IDA employs a number of financial 6.3 Minimum Liquidity Levels
practices, namely: IDA is authorized to borrow from the capital
 Donor funds are encashed over time so as to markets under its Articles of Agreement. However,
match the eleven year average disbursement as a matter of policy IDA does not borrow long-
profile of development credits and grants term to fund its operations. During the IDA15
during a replenishment. For both IDA15 and period, IDA’s minimum liquidity was targeted at 33
IDA16, donors have agreed to a nine year percent of a three-year annual moving average of
standard encashment period, which is an gross disbursements. This minimum liquidity target
acceleration of the 11-year disbursement will continue for IDA16. The minimum liquidity is
profile in order for IDA to generate additional designed to meet both expected and unexpected
investment income. demands. Expected demand arises due to volatility
in IDA’s cash inflows and outflows, and any short-
 Provision of incentives in the form of term draw-down of minimum liquidity for this
discounts to donors for early encashments, purpose is likely to be reversed over time through
provided that the present value of their corresponding net cash inflows.
contributions remains intact.
During the IDA15 period the minimum liquidity
 Expected principal repayments on disbursed was determined to be at $3.5 billion. Based on an
and outstanding credits are committed in analysis of expected and unexpected demands,
advance of new credits and grants, so that IDA’s minimum liquidity requirement at the
resulting disbursements match the time profile beginning of IDA16 is estimated at $3.9 billion.
of credit reflows.
6.4 General Investment Authorization
 Projected future investment income is
committed at the beginning of each The General Investment Authorization for IDA
approved by the Executive Directors provides the
replenishment period.
basic authority under which the liquid assets of IDA
 Through annual adjustments of the level of can be invested. Further, all investment activities
commitment charge on IDA’s credits, total are conducted in accordance with a more detailed
service and commitment charge income is set of Investment Guidelines. The Investment

Guidelines are approved by the Chief Financial tranche is to ensure liquidity and timely availability
Officer (CFO) and implemented by the Treasurer. of the investment balances when needed, with
These Investment Guidelines set out detailed trading investment returns being a secondary consideration.
and operational rules including providing criteria for The tranche is invested in the form of overnight and
eligible instruments for investment, establishing risk very short-term cash investments.
parameters relative to benchmarks, such as an overall
Core Liquidity
stop-loss limit and duration deviation, specifying
concentration limits on counterparties and instrument Tranches 2 and 3 constitute IDA’s core liquidity to
classes, as well as establishing clear lines of meet working capital requirements and meet
responsibility for risk monitoring and compliance. expected and unexpected cashflow volatility. Core
liquidity as a proportion of IDA’s total investments
Policy implementation is executed pursuant to the
is provided in Chart 5 below. It shows that during
Investment Strategy, which is endorsed by the
the last three years (IDA15) core liquidity has
Strategy, Performance and Risk Subcommittee,
remained below 50 percent of total investments.
approved by the Finance Committee and cleared by
the CFO. In addition the Investment Strategy is Chart 5: Core Liquidity Component of
submitted to the Audit Committee for information. Investment Portfolio
The Investment Strategy was updated in June 2011 in In USD
advance of IDA16. billions
25
6.5 Liquidity Tranching
All of IDA’s investments are held in a trading
portfolio but invested in three separate tranches. The 20
following description of these three tranches includes
those changes made as a result of the update to the Donor Asset
& Liability
Investment Strategy in June 2011 and will be 15 Management
effective for the IDA16 period.
Tranche 1- Donor Asset and Liability Management
10
This tranche consists primarily of accelerated
encashment of donor contributions, transfers and Core
Liquidity
grants from IBRD and IFC and voluntary credit 5
prepayments under IDA16. This tranche is managed
under an immunization strategy, whereby the tranche
duration benchmark is aligned to the weighted -
average duration of future net cash outflows, such 30-Jun-09 30-Jun-10 30-Jun-11
that the variation in investment earnings is largely
matched by equivalent changes in the present value
of future net cash outflows. The duration is Table 3 provides a breakdown of the average
periodically reviewed and reset at least annually to balances and returns by tranches of IDA’s liquidity
reflect prevailing conditions. portfolio, for FY2011and FY2010. For an
explanation of the decline in financial returns of the
Tranche 2 - Medium-term Investment total portfolio, refer to Section 8.2 Condensed Net
This tranche consists of the net cash outflows which Income (Loss) Analysis.
have not been included in Tranche 1, funds available Table 3: Average Balances and Returns by
for future replenishments, and 48 percent of Tranches
minimum liquidity. This tranche is managed in
accordance with a return maximization strategy In millions of U.S. dollars
subject to pre-specified risk constraints over a
medium-term (three years) investment horizon. The FY 2011 FY 2010
Average Financial Average Financial
duration and associated benchmarks of this tranche Tranches Balance Return Balance Return
are reviewed quarterly and adjusted as needed, in
line with market conditions so as to conform to the 1 $12,626 1.63% $12,266 5.45%
specified risk tolerance. 2 4,643 1.50% 5,036 4.80%
Tranche 3 -Short-term Investment 3 5,211 0.44% 3,402 0.36%
This tranche is used for managing the operational Total $22,480 1.25% $20,704 4.44%
liquidity for IDA and includes 52 percent of
minimum liquidity. The investment objective of this

6.6 Short-term Borrowings unique risks that are specific to multilateral
development banks and international financial
IDA does not borrow long-term from the capital
institutions.
markets even though it is allowed to do so under its
Articles. IDA’s short-term borrowings consist of 7.2 Governance Structure
securities sold under repurchase agreements and
The governance structure supports senior
securities lent under securities lending agreements.
management in their oversight function, particularly
These agreements are secured predominantly by high
in the coordination of different aspects of risk
quality securities collateral, including government
management, and in connection with risks that run
issued debt, and are used both to enhance returns and
across functional areas.
for liquidity management purposes.
The Finance Committee (Chart 6) which is chaired
As of June 30, 2011, securities lent or sold under
by the CFO, reviews, evaluates and decides on
repurchase agreements totaled $6,013 million, an
matters related to IDA finances to assure that these
increase of $1,045 million over June 30, 2010.
are aligned with corporate financial and risk
Table 4 provides data on short-term borrowings tolerance objectives set by the Board. Topics
activities. covered by the Finance Committee include:
Section 7: FINANCIAL RISK  financial policies and guidelines
MANAGEMENT  new financial initiatives
 financial risks under the CFO’s purview and
7.1 Introduction
setting risk tolerances.
The processes and procedures by which IDA
The four subcommittees that report to the Finance
manages its risk profile continually evolve as its
Committee are shown in Chart 6.
activities change in response to market, credit,
product, operational and other developments. The The Strategy, Performance and Risk Subcommittee
Executive Directors, particularly the Audit develops and monitors the policies under which
Committee members, periodically review trends in market and commercial credit risks faced by IDA
IDA's risk profiles and performance, as well as any are measured, reported and managed. Such policies
significant developments in risk management are ratified by the CFO. The subcommittee also
policies and controls. In addition, on an annual basis, monitors compliance with policies governing
Management prepares an integrated risk monitoring commercial credit exposure and currency
report for the Executive Directors to provide a management. Specific areas of activity include
holistic picture of risk management activities within reviewing and endorsing guidelines for limiting
IDA. A Risk Council comprised of WBG senior balance sheet and market risks, the use of derivative
management provides a platform to look holistically instruments, investing activities, and monitoring
at risk management across the WBG. matches between assets and their funding. The
subcommittee meets at least quarterly to formally
During FY 2011, a Chief Risk Officer (CRO) for the
review current and proposed business strategy and
WBG was appointed and reports to the CFO. The
risk policies, along with business results and
CRO is responsible for: (i) assessing risks across the
financial risk profile to facilitate alignment between
WBG, (ii) benchmarking existing risk management
IDA’s financial and risk management objectives,
practices against major financial institutions; (iii)
plans and activities.
ensuring consistency of WBG risk management
activities with best practice; and (iv) considering
Table 4: Short-term Borrowings

In millions of U.S. dollars, except ratios data in percentages
June 30, 2011 June 30, 2010 June 30, 2009
Securities sold under repurchase agreements and securities
lent under securities lending agreements,
Balance at year-end $6,013 $4,968 $4,684
Average monthly balance during the year $5,450 $4,538 $5,782
Maximum month-end balance $7,984 $6,139 $9,104
Weighted-average rate at June, 30 0.38% 0.15% 0.45%
Weighted-average rate during the year 0.38% 0.25% 1.78%

Chart 6: Finance Committee Governance replenishments. This department discusses policy
Structure and funding frameworks with donors, and allocates
concessional resources between borrowing member
The Strategy, countries. Responsibility for financial management,
Performance and including asset-liability management and the
Risk Subcommittee
management of liquidity, currency and interest rate
risks, also lies with this department.
The Finance Country credit risk, the primary risk faced by IDA,
Initiatives is identified, measured and monitored by the Credit
Subcommittee
Finance Risk Department, led by the Chief Credit Officer
Committee who reports to the Vice-President, Corporate
Finance and Risk Management. This unit is
The Credit Risk
Subcommittee independent from IDA’s operational business units.
Moreover, in order to further protect the
independence of the unit, individual country credit
risk ratings are not shared with the Executive
Finance Complex
Operational Risk Directors and are not made public. In addition, this
Subcommittee department is responsible for determining the
adequacy of provisions for losses on credits and
other exposures, and monitoring recipients that are
The Finance Initiatives Subcommittee provides a vulnerable to crises in the near term.
comprehensive review of new business initiatives
related to IDA. The review covers all financial Counterparty credit risks in IDA's financial
management, legal/reputational, financial operations operations are identified, measured and monitored
and reporting perspectives including risk/reward by the Corporate Finance Department, which also
parameters. This subcommittee’s approval is reports to the Vice-President, Corporate Finance
required before a new IDA initiative may be and Risk Management. The Corporate Finance
proposed to the Finance Committee or the Board of Department works with IDA's financial managers,
Executive Directors. The subcommittee meets as who are responsible for the day-to-day management
needed. of market and counterparty risks, to establish and
document processes that facilitate, control and
The Credit Risk Subcommittee monitors the monitor these risks. These processes are built on a
measurement and reporting of country credit risk. foundation of initial identification and measurement
The subcommittee meets at least quarterly to review of risks by each of the business units. Under the
the impact on the provision for losses on direction of the Finance Committee, policies and
development credits and other exposures of any procedures for measuring and managing such risks
changes in risk ratings of borrowing member are formulated, approved and communicated
countries and developments in the nonaccrual throughout IDA. Senior managers represented on
portfolio and other factors including expected default the Finance Committee are responsible for
frequencies. Whenever a new financial product is maintaining sound credit assessments, addressing
being considered for introduction, it is submitted to transaction and product risk issues, providing a
this subcommittee for review and recommendation review function and monitoring development credit
with respect to country credit risk issues. In addition, and investment portfolio.
the Audit Committee of the Board of Executive
Directors is apprised by management at least twice a 7.3 Risk Bearing Capacity
year on the accumulated provision for losses on The risk bearing capacity of IDA falls under three
development credits and other exposures. main categories. The first is the extent to which
The Operational Risk Subcommittee provides IDA can commit to new financing of development
oversight on operational risks for financial credits, grants and guarantees given its financial
operations. The subcommittee meets on a quarterly position at any point in time. The second is whether
basis to ensure key operational risks relating to there are sufficient resources to meet undisbursed
financial operations are monitored and managed commitments of credits and grants, the funding risk.
appropriately, recognizing that primary responsibility The third is whether IDA has sufficient core
for the management of operational risk resides with liquidity to meet disbursements of approved credits
the business units. and grants, the liquidity risk.
The IDA Resource Mobilization Department which IDA’s capacity to commit to new financing of
reports to the Vice President of Concessional credits, grants and guarantees at any point in time is
Finance and Global Partnerships, manages IDA defined by the Commitment Authority Framework

of the particular replenishment which is effective at Details of the three tranches which comprise IDA’s
that time. The risks to this lending capacity can arise investment portfolio, together with a description of
from both donor and internal resources. These risks the General Investment Authorization and how
are discussed in Section 4: Financial Resources. liquidity is managed, are provided in Section 6:
Management of Investment Portfolio Holdings.
7.4 Funding Risk
Chart 8: Liquidity Risk
Funding risk relates to whether there are sufficient
resources to meet undisbursed commitments of Months
credits and grants. Funding risk is generally 16
represented by: 14
12
undisbursed commitments of credits and grants 10
less 8
investment portfolio and unrestricted demand notes 6
Months of gross disbursements covered by Core
4 Liquidity
Chart 7 shows this funding risk for the last three
2
fiscal year-ends.
0
Chart 7: Funding Risk 30-Jun-09 30-Jun-10 30-Jun-11
USD bIllions
50
7.6 Credit Risk
45 IDA has two types of credit risk: country credit risk
40
35
and commercial credit risk. Country credit risk is
30 the risk of loss due to a country not meeting its
25 contractual obligations and commercial credit risk is
20 the risk of loss due to a counterparty not honoring
15 Undisbursed commitments of credits and grants its contractual obligation.
10
5 Investment portfolio and unrestricted demand notes Country Credit Risk
0
30-Jun-09 30-Jun-10 30-Jun-11 The IDA Resource Mobilization Department
regularly reviews the credit risk of its recipient
7.5 Liquidity Risk member countries in terms of the country’s debt
sustaining capacity. These reviews provide an input
Liquidity risk is monitored by assessing the number in the composition of development credits versus
of months of gross disbursements (based on the grants for new operations. Section 3.8 Development
average for a particular year) that can be met out of Grants describes how funds are allocated for grants
the core liquidity ( tranches 2 and 3) available at a based on a country’s risk of debt distress.
point in time. Chart 8 shows that during the last
three years core liquidity was sufficient to cover at
least ten months of average monthly gross
disbursements.

Box 4: Treatment of Overdue Payments
Overdue by 30 days Where the borrower is the member country, no new development credits or grants to the member
country, or to any other borrower in the country, will be presented to the Executive Directors for
approval; nor will any previously approved credits or grants be signed, until payments for all amounts
30 days overdue or longer have been received. Where the borrower is not the member country, no
new credits or grants to that borrower will be signed or approved.
Overdue by 45 days In addition to the provisions cited above for payments overdue by 30 days, to avoid proceeding
further on the notification process leading to suspension of disbursements, the country as borrower
or guarantor and all borrowers in the country must pay not only all payments overdue by 30 days or
more, but also all payments due regardless of the number of days since they have fallen due. Where
the borrower is not the member country, no new development credits or grants to, or guaranteed by,
the member country, will be signed or approved.
Overdue by 60 days In addition to the suspension of approval for new development credits or grants and signing of
previously approved credits or grants, disbursements on all grants or credits to or guaranteed by the
member country are suspended until all overdue amounts have been paid. This policy applies even
when the borrower is not the member country. Under exceptional circumstances, disbursements
could be made to a member country upon approval by the Executive Directors.
Overdue by more than All development credits made to or guaranteed by a member of IDA are placed in nonaccrual status,
six months unless IDA determines that the overdue amount will be collected in the immediate future. Unpaid
service charges and other charges not yet paid on development credits outstanding are deducted
from the income of the current period. To the extent that these payments are received, they are
included in income. At the time of arrears clearance, a decision is made on the restoration of accrual
status on a case-by-case basis; in certain cases that decision may be deferred until after a suitable
period of payment performance has passed.
Overdue and non-performing development credits IDA mitigates the counterparty credit risk arising
from investments, derivatives and asset/liability
When a borrower fails to make payment on any
management activities through its credit approval
principal, interest or other charges, IDA has the
process and monitoring procedures. The credit
contractual right to suspend disbursements
approval process involves evaluating counterparty
immediately on all credits and grants. IDA's current
creditworthiness, assigning credit limits and
policy however, is to exercise this right through a
determining the risk profile of specific transactions.
graduated approach as summarized in Box 4. These
Credit limits are calculated and monitored on the
policies also apply to those member countries who
basis of potential exposures taking into
are eligible to borrow from both IBRD and IDA, and
consideration current market values and estimates
whose payments on IBRD loans may become
of potential future movements in those values and
overdue. For borrowers with IDA development
collateral agreements with counterparties. If there is
credits who become overdue in their debt service
a collateral agreement with the counterparty to
payments on IBRD loans, IDA also applies the
reduce credit risk, then the amount of collateral
treatment described in Box 4. For a summary of
obtained is based on the credit rating of the
countries with credits or guarantees in nonaccrual
counterparty.
status at June 30, 2011, see Notes to Financial
Statements–Note E–Development Credits and Other For derivative products, IDA uses the estimated
Exposures. replacement cost of the derivative as the measure of
credit exposure. While the contractual principal
Commercial Credit Risk
amount of derivatives is the most commonly used
In the normal course of its business, IDA utilizes volume measure in the derivative markets, it is not a
various derivatives and foreign exchange financial measure of credit or market risk.
instruments to manage its exposure to fluctuations in
For all securities, IDA limits trading to a list of
interest and currency rates. Derivative and foreign
authorized dealers and counterparties. With the
exchange transactions also involve credit risk. The
exception of transactions with IBRD, credit risk is
effective management of credit risk is vital to the
managed through application of eligibility criteria,
success of IDA’s investment and asset/liability
(see Box 5) volume limits and through the use of
management activities. The monitoring and
mark-to-market collateral arrangements for swap
managing of these risks is a continuous process due
transactions
to changing market environments.
Under the mark-to-market collateral arrangements, Table 5 provides details of IDA’s estimated credit
when IDA is in a net receivable position higher than exposure on its investments by counterparty rating
the agreed upon collateral threshold, counterparties category. During FY2011 there was a redeployment
are required to post collateral with IDA. Collateral of the investment portfolio from Sovereigns to short
posted is in the form of certain approved highly term bank deposits resulting in a decline in
liquid investment securities or cash. exposure with counterparty ratings of AAA from 65
percent to 59 percent, and a corresponding increase
As of June 30, 2011 and 2010, the outstanding swap
in the share of counterparty ratings of AA and A
transactions with counterparties other than IBRD, did
from 35 percent to 41 percent. This redeployment
not exceed the threshold amount for either requiring
reflects actions that were undertaken to reduce the
counterparties to post collateral with IDA, or for IDA
interest rate sensitivity of the investment portfolio
to post collateral with counterparties.
and to align the currency composition of the
IDA's commercial credit risk is concentrated in investment portfolio with the new SDR weightings
investments in debt instruments issued by sovereign which became effective on January 1, 2011.
governments, agencies, banks and corporate entities.
The majority of these investments are in AAA and The table also confirms the continued holding of
AA rated instruments (see Table 5). mono-line insured asset-backed securities (ABS)
rated BB or below reflecting the expectation that
With respect to futures and options, IDA generally
these securities will pay off at maturity.
closes out most open positions prior to expiration.
Futures are settled on a daily basis. 7.7 Market Risk
For the contractual value, notional amounts and IDA faces risks which result from market
related credit risk exposure amounts by instrument, movements, primarily changes in currency
see the Notes to Financial Statements-Note D- exchange rates and interest rates. The manner in
Derivative Instruments. which these market risks impact IDA’s finances and
the steps taken by IDA to counter them is described
below.
Box 5: Eligibility Criteria for IDA’s Investment Securities

Instrument Securities Description
IDA may only invest in obligations issued or unconditionally guaranteed by governments of
member countries with a minimum credit rating of AA-. However, if government obligations
Sovereigns
are denominated in the national currency of the issuer, no rating is required.
IDA may only invest in obligations issued by an agency or instrumentality of a government

of a member country, a multilateral organization or any other official entity other than the
Agencies
government of a member country, with a minimum credit rating of AA-.
Corporates and asset-backed IDA may only invest in securities with an AAA credit rating.
securities (ABS)
IDA may only invest in time deposits issued or guaranteed by financial institutions, whose
a
Time deposits senior debt securities are rated at least A-.
a. Time deposits include certificates of deposit, bankers’ acceptances and other obligations issued or unconditionally guaranteed
by banks or other financial institutions
Table 5: IDA Investment Credit Exposure by Counterparty Rating

At June 30, 2011 At June 30, 2010
Agencies, ABS,
Corporates and
Counterparty Rating Sovereigns Time Deposits Total % of Total Total % of Total
AAA $15,087 $2,762 $17,849 59 $17,158 65
AA 2,149 6,814 8,963 30 7,612 29
A 3,235 3,235 11 1,538 6
BB or below 14 14 * 10 *
Total $17,236 $12,825 $30,061 100 $26,318 100
* Denotes less than 0.5%.

Currency Exchange Rate Risk significant proportion of these costs are not
recorded as income but rather as equity through
IDA faces currency exchange rate risk exposure as a
members’ subscriptions and contributions. This
result of the currency mismatch between its
asymmetry has resulted in IDA recording net losses
commitments for development credits and grants,
over the years, as reflected by the accumulated
which are denominated in SDRs; donor
deficit. However, IDA’s total equity remains
contributions, which are denominated in both
positive.
national currencies and SDRs; and the portion of
IDA’s internal resources and expenditures that is Additionally, IDA uses currency forward contracts
denominated in U.S. dollars. to hedge its exposure to potential loss of value of
contributions in national currencies vis-à-vis the
IDA uses currency forward contracts to convert
SDRs pledged by donors at the start of each
donors’ encashments provided in national currencies
replenishment. The translation adjustment on the
into the four currencies of the SDR basket. IDA's
non-functional currencies of these forward contracts
transactions are intermediated by IBRD for
is reported in the income statement. However, the
efficiency purposes, due to IBRD's established
economic offset represented by the change in value
systems and collateral management processes.
of donor pledges is not reported in IDA’s financial
Under this arrangement, IDA enters into foreign statements, since donor pledges do not meet the
exchange forwards with IBRD, and IBRD definition of assets.
simultaneously enters into off-setting foreign
IDA’s financial and operational management is
exchange forwards with market counterparts. For
driven by its lending capacity as determined by the
further details please see Notes to Financial
commitment authority of the particular
Statements-Note D –Derivative Instruments.
replenishment effective at that time, and by having
IDA mitigates the currency exchange rate risk by sufficient liquidity available for operational
rebalancing the currency composition of its liquid purposes (see Section 4 Financial Resources).
asset portfolio and the hedges of its non-SDR cash
Table 6 Condensed Statement of Income provides a
flows to the SDR composition on a quarterly basis.
comparison of the main sources of income and
Interest Rate Risk expenses between FY2011 and FY2010. The net
loss of $2,332 million in FY2011 reflects an
IDA funds a portion of its development credits and
increase of $1,255 million from the net loss of
grants with internal resources, including investment
FY2010. The factors contributing to this increase in
income on its liquid asset portfolio. IDA’s liquid
net loss are discussed below.
assets are invested in separate tranches each with its
own set of duration benchmarks. Changes in interest Decrease in net investment income by $605 million:
rates have a direct impact on the mark-to-market This decrease was primarily driven by lower
values of the liquid assets and hence on the effective yields, as well as lower returns on the euro
investment income reported by IDA. holdings due to the steepening of the yield curve.
This decline is consistent with the economic
Section 8: FINANCIAL RESULTS environment described above and is reflected in the
8.1 Economic Environment financial returns of the investment portfolio
dropping from 4.44% in FY2010 to 1.25% in
During FY2011, there was a steepening of the major FY2011. IDA’s investment portfolio is sensitive to
yield curves, particularly the euro and U.S. dollar. In interest rate movements as a result of having a
contrast during FY2010 there was a tightening of longer duration to help it immunize interest rate
credit spreads and downward shifts in the major yield risk. IDA’s investment portfolio had a duration of
curves. 2.1 years as of June 30, 2011 and June 30, 2010.
During FY2011, the U.S. dollar depreciated against Increase in exchange rate losses on non functional
the SDR by 8.2%, whereas during FY2010, it currencies of $288 million: This was primarily due
appreciated against the SDR by 4.7%. to the continued depreciation of the U.S. dollar
8.2 Condensed Net Income (Loss) Analysis against the majority of the non functional currency
liabilities in FY2011 as compared to FY2010. These
In management’s view, IDA’s reported net loss does liabilities arise out of the payable leg of currency
not reflect the true economic income of IDA as a forwards used to hedge the SDR value of future
result of the following asymmetries. donor commitments.
Under U.S. GAAP, development grants and Increase in development grants: The $210 million
increases in the provisions for debt relief and credit increase in development grants was primarily
losses are recorded as charges to net income. In accounted for by the Africa region which made up
contrast, donor contributions which fund a 69 percent of the total grants committed in FY2011.

Increase in fair value loss on non-trading portfolios 8.3 Condensed Balance Sheet Analysis
of $98 million: The net loss of $101 million during
Variances between June 30, 2011 and June 30, 2010
FY2011 was primarily due to the effect of the
balances in IDA’s condensed balance sheet are
steepening of the euro yield curve on the currency
shown in Table 7. Explanations for the major
forward contracts used to hedge donor commitments
variances are provided below.
of IDA16 and prior replenishments. In FY2010, the
net loss of $3 million was primarily on account of Investment assets net of liabilities represent the net
downward shifts of the U.S. dollar and euro yield investment portfolio, which increased from $21,639
curves on the same currency forward contracts. As million to $24,872 million. The increase of $3,233
mentioned above, the economic offset to these gains million was primarily due to cash received of
and losses as represented by the change in value of $7,580 million on account of members’
the related donor pledges is not reported in IDA’s subscriptions and contributions and the positive
financial statements. effect of exchange rate changes of $1,638 million,
partially offset by net disbursements of $5,520
Increase in administrative expenses of $84 million:
million for development credits.
This increase was primarily due to an increase in
IDA’s share of total expenses jointly incurred by The increase in demand obligations of $2,619
IBRD and IDA, reflecting a higher proportion of million was due to receipt of demand notes of
IDA operations in FY2011 as compared to FY2010. $7,549 million, exchange rate adjustments of $926
million partially offset by encashments of $5,856
Decrease in the release of provision for debt relief of
million.
$60 million: During FY2011, there was a release in
provision of $74 million due to the postponement of Subscriptions and contributions paid-in increased by
the estimated Decision and Completion Points $10,197 million due to receipt of demand notes of
under the HIPC Debt Initiative for several countries. $7,549 million, cash contributions of $1,724 million
In comparison, during FY2010 the release was $134 and exchange rate adjustments of $924 million.
million resulting in a decrease in release of provision
Accumulated other comprehensive income
of $60 million between the two fiscal years.
increased by $9,935 million primarily due to the
These were partially offset by: 8.2% depreciation of the U.S. dollar against the
SDR during FY2011.
Increase in income from development credits and
guarantees of $60 million: This increase was due to
the volume effect of an increase in development
credits outstanding.
Table 6: Condensed Statement of Income
For the fiscal years ended June 30 2011 2010 Variance

Income
Income from development credits and guarantees $ 897 $ 837 $ 60
Net investment income 305 910 (605)
Transfers and grants from affiliated organizations and trust funds 991 990 1
Expenses
Administrative expenses (1,234) (1,150) (84)
Development grants (2,793) (2,583) (210)
Provision for debt relief decrease 74 134 (60)
Provision for losses on credits and other exposures, increase (30) (44) 14
Other expenses (2) (1) (1)
Effect of exchange rate changes on non functional currencies (455) (167) (288)
Net unrealized losses on non-trading derivatives (101) (3) (98)
Project preparation advances (PPA) grants 16 - 16
Net Loss $(2,332) $(1,077) $(1,255)

Table 7: Condensed Balance Sheet

As of June 30 2011 2010 Variance
Assets
Investment assets $32,479 $ 27,680 $4,799
Derivatives relating to asset/liability management 9,886 4,087 5,799
Receivables and other assets including cash 1,496 1,462 34
Development credits outstanding 125,287 113,474 11,813
Less accumulated provision for debt relief and losses on development
credits (6,947) (8,948) 2,001
Total assets $162,201 $137,755 $24,446
Liabilities and equity
Liabilities relating to investments $ 7,607 $ 6,041 $1,566
Derivatives relating to asset/liability management 9,893 4,144 5,749
Payables and other liabilities including Maintenance of Value 8,056 6,106 1,950
Subscriptions and contributions paid-in 167,610 157,413 10,197
Demand obligations (9,663) (7,044) (2,619)
Accumulated deficit (39,096) (36,764) (2,332)
Accumulated other comprehensive income 17,794 7,859 9,935
Total liabilities and equity $162,201 $137,755 $24,446
Derivative assets and derivative liabilities relating to accounting policies that require management to
asset-liabilities management increased by $5,799 make judgments that are difficult, complex or
million and $5,749 million respectively. This subjective and relate to matters that are inherently
increase was due to new trades relating to the uncertain.
hedging of IDA16 donor pledges, maturities of
9.1 Fair Value of Financial Instruments
existing trades and adjustments for mark-to-market
and exchange rate movements. All fair value adjustments are recognized through
the income statement. The fair values of financial
Development credits outstanding increased by
instruments are based on a three level hierarchy.
$11,813 million due to net disbursements of $5,520
million and positive translation adjustment of $8,772 For financial instruments classified as level 1 and 2,
million, partially offset by development credits of inputs are based on observable market data and less
$2,479 million being written off under HIPC and judgment is applied in arriving at a fair value
MDRI. The positive translation adjustment was due measurement. For financial instruments classified as
to the 8.2% depreciation of the U.S. dollar against level 3, significant unobservable inputs are used.
the SDR during FY2011. These inputs require management to make
significant assumptions and judgments in arriving at
The decrease of $2,001 million in the accumulated
a fair value measurement.
provision for debt relief and losses on development
credits was due to a combination of the following The majority of IDA’s financial instruments are
factors. Development credits written off under HIPC classified as level 1 and level 2, as the inputs are
and MDRI of $2,479 million, decrease of $74 based on observable market data and less judgment
million due to Decision and Completion Point is applied in arriving at fair value measures.
dates being postponed for a number of countries
partially offset by translation adjustment of $532 On a quarterly basis, the methodology, inputs and
million and an increase of $20 million in provision assumptions are reviewed to assess the
appropriateness of the fair value hierarchy
for losses on credits.
classification of each financial instrument. All the
Section 9: CRITICAL ACCOUNTING financial models used for input to IDA's financial
POLICIES AND THE USE OF statements are subject to both internal and periodic
ESTIMATES external verification and review by qualified
personnel.
Note A of IDA’s financial statements contains a
summary of IDA’s significant accounting policies. 9.2 Provision for HIPC Debt Initiative and
These policies, as well as significant estimates made MDRI
by management, are integral to the presentation of The adequacy of the accumulated provision for the
IDA’s financial condition. While all of these policies HIPC Debt Initiative and MDRI is based on both
require a certain level of management judgment and quantitative and qualitative analyses of various
estimates, this section discusses the significant factors, including estimates of Decision and

Completion Point dates. IDA periodically reviews  financial products and programs, such as the
these factors and reassesses the adequacy of the terms and conditions of development credits,
accumulated provision for the HIPC Debt Initiative grants and guarantees, and the provision and
and MDRI. Adjustments to the accumulated modalities of debt relief; and
provision are recorded as a charge against or
addition to income.  financial management policies, such as
investment authority and policy, the method
9.3 Provision for Losses on Development of apportioning administrative expenses
Credits and Other Exposures between IDA and IBRD, and the use of IDA's
IDA's accumulated provision for losses on credits internal resources.
and other exposures reflects the probable losses The President is the Chairman of the Board and
inherent in its nonaccrual and accrual portfolios after chief of the operating staff of IDA. Under the
taking into consideration the expected relief under direction of the Board, the President conducts the
the HIPC Debt Initiative and MDRI. The provision ordinary business of IDA and is responsible for the
required is a function of the expected default organization, appointment and dismissal of its
frequency and the assumed severity of the loss given officers and staff.
default for each of the borrowers.
Board Membership
The expected default frequency is based on the
borrower’s assigned risk rating. The determination In accordance with its Articles of Agreement,
of a borrower's risk rating is based on a quantitative members of the Board are appointed or elected every
framework which relies primarily on considerations two years by their member governments. Currently
of political risk, external debt and liquidity, fiscal the Board is composed of 25 Executive Directors.
policy and public debt burden, balance of payments These Executive Directors are neither officers nor
risks, economic structure and growth prospects, staff of IDA. The President is the only management
monetary and exchange rate policy, financial sector member of the Board, serving as a non-voting
risks and corporate sector debt and other member and as Chairman of the Board. The
vulnerabilities. IDA periodically reassesses the Executive Directors have established several
adequacy of the accumulated provision for losses on committees including:
credits and other exposures accordingly.  Audit Committee
Adjustments to the accumulated provision are
recorded as a charge against or addition to income.  Budget Committee
Actual losses may differ from expected losses due to  Committee on Development Effectiveness
unforeseen changes in any of the factors that affect
borrowers' creditworthiness.  Committee on Governance and
Administrative Matters
Additional information on IDA's provisioning policy
and the status of nonaccrual loans can be found in  Ethics Committee
the Notes to Financial Statements-Note A-Summary
of Significant Accounting and Related Policies and  Personnel Committee
Note E-Development Credits and Other Exposures. The Board and its committees function in
continuous session at the principal offices of IDA, as
Section 10: GOVERNANCE AND
business requires. Each committee's terms of
CONTROLS reference establishes its respective roles and
10.1 General Governance responsibilities. As committees do not vote on
issues, their role is primarily to serve the Board in
IDA's decision-making structure consists of the discharging its responsibilities.
Board of Governors, Executive Directors (the
Board) and the President and staff. The Board of The Board is required to consider proposals made by
Governors is the highest decision-making authority. the President on IDA’s development credits, grants
Governors are appointed by their member and guarantees, and other policies that impact IDA's
governments for a five-year term which is general operations. The Board is also responsible for
renewable. The Board of Governors may delegate presenting to the Board of Governors, at the Annual
authority to the Board to exercise any of its powers, Meetings, audited accounts, an administrative
with the exception of certain powers enumerated in budget, and an annual report on operations and
IDA's Articles of Agreement (Article VI, Section policies as well as other matters.
2(c)).
The Board is responsible for IDA's general
operations. It reviews and approves IDA's financial
policies and practices, including:
Senior Management Changes Executive Sessions
Effective October 4, 2010, Mahmoud Mohieldin Members of the Committee may convene in
joined IDA as a Managing Director. executive session at any time, without management
present. Under the Committee's terms of reference, it
Effective August 15, 2011, Ngozi Okonjo-Iweala
meets separately in executive session with the
will retire as Managing Director of IDA.
external and internal auditors.
10.2 Audit Committee
Access to Resources and to Management
Membership
Throughout the year, the Audit Committee receives
The Audit Committee consists of eight members a large volume of information, which supports the
drawn from the Board. Membership on the preparation of the financial statements. The Audit
Committee is determined by the Board, based upon Committee meets both formally and informally
nominations by the Chairman of the Board, throughout the year to discuss financial and
following informal consultation with the Executive accounting matters. Executive Directors have
Directors. In addition, membership of the complete access to management. The Audit
Committee is expected to reflect the economic and Committee reviews and discusses with management
geographic diversity of IDA's member countries and topics contemplated in their Terms of Reference.
a balanced representation between recipient and
The Audit Committee has the capacity, under
non-recipient member countries. Generally,
exceptional circumstances, to obtain advice and
Committee members are appointed for a two year
assistance from outside legal, accounting or other
term; reappointment to a second term, when
advisors as deemed appropriate.
possible, is desirable for continuity. Audit
Committee meetings are generally open to any 10.3 Business Conduct
member of the Board who may wish to attend, and
The World Bank promotes a positive work
non-Committee members of the Board may
environment where staff members understand their
participate in the discussion. In addition, the
ethical obligations to the institution, which are
Chairman of the Audit Committee may speak in that
embodied in its Core Values and Principles of Staff
capacity at meetings of the Board, with respect to
Employment. In support of this commitment, the
discussions held in the Audit Committee.
institution has in place a Code of Conduct, entitled
Key Responsibilities Living our Values (the Code). The Code applies to
all staff worldwide and is available on the World
The Audit Committee is appointed by the Board to
Bank’s website, www.worldbank.org. Staff,
assist it in the oversight and assessment of IDA's
including consultants, are required to complete an
finances and accounting, including the effectiveness
acknowledgment that they will abide by the tenets of
of financial policies, the integrity of financial
the Code.
statements, the system of internal controls regarding
finance, accounting and ethics (including fraud and The business conduct obligations of staff are
corruption), and financial and operational risks. The articulated in the Staff Manual (Principles of Staff
Audit Committee also has the responsibility for Employment, Staff Rules), Administrative Manual
reviewing the performance and recommending to the and other guidelines. The Principles and Staff Rules
Board the appointment of the external auditor, as require that all staff avoid or properly manage
well as monitoring the independence of the external conflicts of interest. In accordance with the Staff
auditor. The Audit Committee participates in Rules, senior managers must complete a confidential
oversight of the internal audit function and reviews financial disclosure instrument with the Office of
the annual internal audit plan. In the execution of its Ethics and Business Conduct.
role, the Committee discusses with management, the
In addition to the Code, Staff and Administrative
external auditors, and the internal auditors, financial
Manuals, guidance for staff is also provided through
issues and policies which have a bearing on IDA’s
programs, training materials, and other resources.
financial position. The Committee also reviews with
Managers are responsible for ensuring that internal
the external auditor IDA’s annual financial
systems, policies, and procedures are consistently
statements prior to their publication and
aligned with the World Bank’s business conduct
recommends them for approval to the Board. The
framework.
Audit Committee monitors the evolution of
developments in corporate governance and the role The World Bank has both an Ethics Help Line and
of audit committees on an ongoing basis and a Fraud and Corruption hotline. A third-party service
updated its terms of reference in July 2009. offers numerous methods of worldwide
communication. Other reporting channels include:

phone, mail, email or through the units’ respective 10.5 IDA Controls Review over Lending
websites. Callers may also visit the offices in person. Operations
IDA has in place procedures for the receipt, In FY2011, the World Bank’s Independent
retention and handling of recommendations and Evaluation Group (IEG) reported that a
concerns relating to business conduct identified comprehensive review of internal controls over
during accounting, internal control and auditing lending operations had formally concluded with
processes. IDA’s internal controls being further strengthened
with monitoring and reporting processes in place, to
The World Bank’s Staff Rules clarify and codify
ensure that the established standards are maintained.
the obligations of staff in reporting suspected fraud,
corruption or other misconduct that may threaten its 10.6 Internal Control over Financial
operations or governance. Additionally, these rules Reporting
offer protection from retaliation. Strengthened
IDA's management makes an annual assertion that,
whistleblower protections have also been
as of June 30 of each fiscal year, its system of
implemented recently.
internal control over its external financial reporting
10.4 Auditor Independence has met the criteria for effective internal control over
external financial reporting as described in the
The appointment of the external auditor for IDA is
Committee of Sponsoring Organizations of the
governed by a set of Board-approved principles. Key
Treadway Commission (COSO) framework.
features of these principles include:
Concurrently IDA's external auditors provide an
 Prohibition of the external auditor from the attestation report that management's assertion
provision of all non audit-related services. regarding the effectiveness of internal control over
 All audit-related services must be pre- financial reporting is fairly stated in all material
approved on a case-by-case basis by the respects.
Board, upon recommendation of the Audit For each fiscal year, management performs an
Committee. evaluation of internal control over external financial
 Mandatory rebidding of the external reporting for the purpose of determining if there
audit contract every five years, with a were any changes made in internal control during
limitation of two consecutive terms and the fiscal year covered by this report that had
mandatory rotation thereafter. materially affected, or reasonably likely to
materially affect, IDA's internal control over
External auditors are appointed to a five year term of external financial reporting. As of June 30, 2011, no
service. This is subject to annual reappointment such changes had occurred.
based on the recommendation of the Audit
Committee and approval of a resolution by the
Executive Directors.
Communication between the external auditor and the
Audit Committee is ongoing, as frequently as
deemed necessary by either party. The Audit
Committee meets periodically with the external
auditor and individual members of the Audit
Committee have independent access to the external
auditor. IDA's external auditors follow the
communication requirements with audit committees
set out under U.S. generally accepted auditing and
attestation standards and International Standards on
Auditing.

Glossary of Terms
Asset-Backed Securities (ABS): Asset-Backed Hedging: Hedging is a risk management technique of

Securities are instruments whose cash flows are based entering into offsetting commitments to eliminate or
on a pool of underlying assets managed by a trust. minimize the impact of adverse movements in value or
Mortgage-backed securities are a type of ABS whose cash flow of the underlying instrument or economic
cash flows are based on the repayments of the condition.
mortgages. Instrument of Commitment (IoC): A government’s
Blend Borrower: IDA Member that is eligible to commitment to make a subscription or a subscription
borrow from IDA on the basis of per capita income and and contribution to IDA’s resources.
is also eligible to borrow from IBRD on the basis of Membership votes: Voting rights accorded to IDA
limited creditworthiness. Given the access to both members are based on participation in the initial
sources of funds, blend borrowers are expected to limit subscription and subsequent replenishments. All
IDA funding to social sector projects and to use IBRD members whether they are Part I or Part II have the
resources for projects in the ‘harder’ sectors. same number of membership votes.
Commitment Authority: Total value of resources Net Disbursements: Credit disbursements net of
available during a particular replenishment including repayments and prepayments.
donor contributions, internal resources, IBRD transfers,
Part I and Part II Members: IDA’s Articles
IFC grants and other resources. The Commitment
distinguish between two categories of original
Authority level is monitored periodically to ensure that
members - Part I and Part II - and provide for a
funding is available to meet commitments and to
different treatment of the initial subscription payments
provide early warning signs of any problems in terms
by each group. Part I members were originally those
of resource availability.
countries, generally developed countries that contribute
Completion Point: When conditions specified in the to the resources of IDA, whose economic and financial
legal notification sent to a country are met and the situation justified making the entire amount of their
country’s other creditors have confirmed their full subscriptions available on a freely convertible basis.
participation in the HIPC debt relief initiative. When a Part II members are mostly developing countries who
country reaches its Completion Point, IDA’s subscribe to IDA replenishments for voting rights.
commitment to provide the total debt relief for which Some Part II members also contribute to the resources
the country is eligible, becomes irrevocable. of IDA.
Committee of Sponsoring Organizations of the Replenishment: The process of periodic review of the
Treadway Commission (COSO): Committee of adequacy of IDA resources and authorization of
Sponsoring Organizations of the Treadway additional subscriptions. Under IDA’s Articles,
Commission. COSO was formed in 1985 to sponsor the replenishments are required to be approved by IDA’s
National Commission on Fraudulent Financial Board of Governors by a two-thirds majority of the
Reporting, an independent private-sector initiative total voting power.
which studied the causal factors that can lead to
Special Drawing Rights (SDR): The SDR is an
fraudulent financial reporting. In 1992, COSO issued
international reserve asset, created by the International
its Internal Control-Integrated Framework, which
Monetary Fund in 1969 to supplement the existing
provided a common definition of internal control and
official reserves of member countries. The SDR is
guidance on judging its effectiveness.
defined as a basket of currencies, consisting of the
Decision Point: Decision by the Executive Directors euro, Japanese yen, pound sterling, and U.S. dollar.
of IDA to provide debt relief under the HIPC Initiative. The basket composition is reviewed every five years to
Deputies: Representatives of countries who contribute ensure that it reflects the relative importance of
to the resources of IDA. They include representatives currencies in the world's trading and financial systems.
from both Part I members and those Part II members Subscription votes: Voting rights accorded to IDA
who contribute to IDA’s replenishments. members are based on subscriptions. Subscription votes
Development Committee: The Development are calculated at a specific cost per vote for each
Committee is a forum of the World Bank and the replenishment and are dependent on each member's
International Monetary Fund that facilitates subscription amount. Additional subscription votes are
intergovernmental consensus building on development provided to members who contribute to the
issues. replenishment.
Duration: Duration provides an indication of the Voting Rights: IDA’s voting rights consist of a
interest rate sensitivity of a fixed income security to combination of membership and subscription votes.
changes in its underlying yield. World Bank: Refers collectively to IBRD and IDA in
Encashment: Draw down (payment in cash) of a this document.
promissory note in accordance with a schedule agreed
for each replenishment.

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INTERNATIONAL DEVELOPMENT ASSOCIATION
FINANCIAL STATEMENTS AND INTERNAL CONTROL REPORTS
JUNE 30, 2011
Management’s Report Regarding Effectiveness of Internal Control Over External Financial

Reporting 36
Independent Auditors’ Report on Management’s Assertion Regarding Effectiveness of Internal

Control Over Financial Reporting 38
Independent Auditors’ Report 39
Balance Sheet 40
Statement of Income 42
Statement of Comprehensive Income 43
Statement of Changes in Accumulated Deficit 43
Statement of Cash Flows 44
Summary Statement of Development Credits 45
Statement of Voting Power and Subscriptions and Contributions 48
Notes to Financial Statements 51

MANAGEMENT’S REPORT REGARDING EFFECTIVENESS OF INTERNAL
CONTROL OVER EXTERNAL FINANCIAL REPORTING
36 IDA FINANCIAL STATEMENTS: JUNE 30, 2011

IDA FINANCIAL STATEMENTS: JUNE 30, 2011 37
INDEPENDENT AUDITORS’ REPORT ON MANAGEMENT’S ASSERTION
REGARDING EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL
REPORTING

INDEPENDENT AUDITORS’ REPORT

BALANCE SHEET
June 30, 2011 and June 30, 2010
2011 2010
Assets
Due from Banks
Unrestricted currencies $ 20 $ 15
Currencies subject to restrictions 30 27
50 42
Investments—Trading (including securities transferred under
repurchase or securities lending agreements of $4,375 million-
June 30, 2011; $4,136 million-June 30, 2010)—Note C 29,818 26,011
Securities Purchased Under Resale Agreements—Note C - 3
Derivative Assets
Investments—Notes C and D 304 106
Asset-liability management—Notes D and F 9,886 4,087
10,190 4,193
Receivable from Affiliated Organization - Unrestricted—Note F 999 1,088
Other Receivables
Receivable from investment securities traded—Note C 2,355 1,558
Accrued service and commitment charges 259 214
2,614 1,772
Development Credits Outstanding (Summary Statement of
Development Credits, and Note E)
Development credits 163,346 144,170
Less: Undisbursed balance 38,059 30,696
Development credits outstanding 125,287 113,474
Less: Accumulated provision for debt relief and losses on

development credits 6,947 8,948
Plus: Deferred development credits origination costs 28 30
Net development credits outstanding 118,368 104,556
Other Assets—Note G 162 90
Total Assets $162,201 $137,755

2011 2010
Liabilities
Securities Sold Under Repurchase Agreements, Securities Lent
under Securities Lending Agreements, and Payable for Cash
Collateral Received—Note C $ 6,013 $ 4,970
Derivative Liabilities
Investments—Notes C and D 309 103
Asset-liability management—Notes D and F 9,893 4,144
10,202 4,247
Payable for Development Grants—Note H 6,830 5,837
Payable to Affiliated Organization—Note F 370 357
Other Liabilities
Payable for investment securities purchased—Note C 1,285 968
Accounts payable and miscellaneous liabilities—Notes E and G 1,085 145
2,370 1,113
Total Liabilities 25,785 16,524
Equity
Members’ Subscriptions and Contributions (Statement of Voting
Power and Subscriptions and Contributions, and Note B)
Unrestricted 204,014 198,814
Restricted 318 317
Subscriptions and Contributions committed 204,332 199,131
Less:
Subscriptions and Contributions receivable 34,510 39,725
Cumulative discounts on Subscriptions and Contributions 2,212 1,993
Subscriptions and Contributions paid-in 167,610 157,413
Nonnegotiable, Noninterest-bearing Demand Obligations on Account

of Members’ Subscriptions and Contributions
Unrestricted (9,610) (6,993)
Restricted (53) (51)
(9,663) (7,044)
Deferred Amounts to Maintain Value of Currency Holdings (229) (233)
Accumulated Deficit (Statement of Changes in Accumulated Deficit) (39,096) (36,764)
Accumulated Other Comprehensive Income—Note I 17,794 7,859
Total Equity 136,416 121,231
Total Liabilities and Equity $162,201 $137,755
The Notes to Financial Statements are an integral part of these Statements.

STATEMENT OF INCOME
For the fiscal years ended June 30, 2011, June 30, 2010 and June 30, 2009

2011 2010 2009
Income
Development credits and guarantees—Note E
Service and interest charges $ 895 $ 835 $ 794
Commitment charges and guarantee fee income 2 2 7
897 837 801
Investments, net—Trading—Notes C and D 320 921 1,623
Transfers and grants from affiliated organizations and trust
funds - Unrestricted—Notes F and G 991 990 1,037
Other income – – 14
Total Income 2,208 2,748 3,475
Expenses
Administrative expenses—Notes F, G and J 1,234 1,150 975
Development grants—Note H 2,793 2,583 2,575
Interest expense on securities sold under repurchase
agreements 15 11 124
Provision for debt relief and for losses on development
credits and other exposures, net—(decrease)—Note E (44) (90) (1,236)
Non-functional currency translation adjustment losses
(gains), net 455 167 (859)
Write-off on sale of development credits—Note E – – 43
Fair value adjustment on non-trading portfolios, net—Note D 101 3 (14)
Project Preparation Advances (PPA) grants (16) - 19
Other expenses 2 1 (2)
Total Expenses 4,540 3,825 1,625

Net (Loss) Income $(2,332) $(1,077) $ 1,850

STATEMENT OF COMPREHENSIVE INCOME
2011 2010 2009
Net (Loss) Income $(2,332) $(1,077) $ 1,850
Other Comprehensive Income (Loss)—Note I
Currency translation adjustments on functional currencies 9,935 (5,924) (5,182)
Comprehensive Income (Loss) $ 7,603 $(7,001) $(3,332)
STATEMENT OF CHANGES IN ACCUMULATED DEFICIT

2011 2010 2009
Accumulated Deficit at beginning of the fiscal year $(36,764) $(35,687) $(37,537)
Net (loss) income for the year (2,332) (1,077) 1,850
Accumulated Deficit at end of the fiscal year $(39,096) $(36,764) $(35,687)

STATEMENT OF CASH FLOWS

2011 2010 2009
Cash flows from investing activities
Development credits
Disbursements $(8,021 ) $(9,336) $(7,010)
Principal repayments 2,501 2,349 2,182
Development credits sold - - 27
Net cash used in investing activities (5,520) (6,987) (4,801)
Cash flows from financing activities
Members’ subscriptions and contributions 7,580 8,730 7,272
Cash flows from operating activities
Net (loss) income (2,332) (1,077) 1,850
Adjustments to reconcile net (loss) income to net cash used in
operating activities
Provision for debt relief and for losses on development credits and
other exposures, net—(decrease) (44) (90) (1,236)
Non-functional currency translation adjustment losses (gains), net 455 167 (859)
Fair value adjustment on non-trading portfolios, net 101 3 (14)
Write-off on sale of development credits - - 43
Deferred development credits origination costs/PPA grants (14) - 18
Changes in:
Investments—Trading (1,245) (778) 1,210
Net investment securities traded/purchased –Trading (1,139) (1,073) 325
Net derivatives—Investments (59) (10) (50)
Net derivatives—Asset/liability management (90) (104) 151
Net securities purchased/sold under resale/repurchase
agreements and payable for cash collateral received 834 548 (4,602)
Net receivable from affiliated organizations 103 62 460
Payable for development grants 532 444 366
Accrued service and commitment charges (32) 12 (13)
Other assets (78) 7 (153)
Accounts payable and miscellaneous liabilities 941 37 69
Net cash used in operating activities (2,067) (1,852) (2,435)
Effect of exchange rate changes on unrestricted cash 12 (3) 1
Net increase (decrease) in unrestricted cash 5 (112) 37
Unrestricted cash at beginning of the fiscal year 15 127 90
Unrestricted cash at end of the fiscal year $ 20 $ 15 $ 127
Supplemental disclosure
Increase (decrease) in ending balances resulting from exchange
rate fluctuations
Development credits outstanding $ 8,772 $(5,251) $(4,680)
Investment portfolio 1,638 (939) (909)
Derivatives - Asset/liability management 61 (533) 532
Principal repayments forgiven under Heavily Indebted Poor
Countries (HIPC) Debt Initiative (15) (48) (76)
Development credits written off under HIPC Debt Initiative and
Multilateral Debt Relief Initiative (MDRI) upon countries reaching
their Completion Points (2,464) (1,108) (650)
Development credits sold – nominal value - - 70
The Notes to Financial Statements are an integral part of these Statements

SUMMARY STATEMENT OF DEVELOPMENT CREDITS
June 30, 2011

Total Undisbursed Development Percentage of
development development credits development credits
a
Borrower or guarantor credits credits outstanding outstanding
Afghanistan $ 453 $ 29 $ 424 0.34%

Albania 995 99 896 0.72
Angola 834 444 390 0.31
Armenia 1,286 55 1,231 0.98
Azerbaijan 1,170 358 812 0.65
Bangladesh 15,089 3,933 11,156 8.90
Benin 692 283 409 0.33
Bhutan 158 13 145 0.12
Bolivia 683 295 388 0.31
Bosnia and Herzegovina 1,317 87 1,230 0.98
Botswana 4 - 4 *
Burkina Faso 1,023 185 838 0.67
Burundi 185 11 174 0.14
Cambodia 702 107 595 0.47
Cameroon 1,099 697 402 0.32
Cape Verde 334 21 313 0.25
Central African Republic 53 37 16 0.01
Chad 941 53 888 0.71
China 9,159 - 9,159 7.31
Comoros 118 - 118 0.09
Congo, Democratic Republic of 1,043 134 909 0.73
Congo, Republic of 135 47 88 0.07
Cote d'Ivoire 1,837 43 1,794 1.43
Djibouti 162 2 160 0.13
Dominica 30 2 28 0.02
Dominican Republic 7 - 7 0.01
Ecuador 9 - 9 0.01
Egypt, Arab Republic of 1,360 9 1,351 1.08
El Salvador 7 - 7 0.01
Equatorial Guinea 45 - 45 0.04
Eritrea 513 24 489 0.39
Ethiopia 3,841 1,736 2,105 1.68
Gambia, The 67 - 67 0.05
Georgia 1,247 16 1,231 0.98
Ghana 3,624 1,387 2,237 1.79
Grenada 67 21 46 0.04
Guinea 1,270 39 1,231 0.98
Guinea-Bissau 60 - 60 0.05
Guyana 25 15 10 0.01
Honduras 922 274 648 0.52
India 33,355 6,355 27,000 21.55
Indonesia 2,443 50 2,393 1.91
Iraq 541 414 127 0.10
Jordan 31 - 31 0.02
Kenya 5,550 2,102 3,448 2.75
Kosovo 46 46 * *
Kyrgyz Republic 775 100 675 0.54
Lao People's Democratic Republic 675 1 674 0.54
Lesotho 364 28 336 0.27
Liberia 123 113 10 0.01
Macedonia, former Yugoslav Republic of 377 - 377 0.30
Madagascar 1,468 241 1,227 0.98
Malawi 586 316 270 0.22
Maldives 121 13 108 0.09
Mali 1,506 592 914 0.73

SUMMARY STATEMENT OF DEVELOPMENT CREDITS (continued)
June 30, 2011

Borrower or guarantor credits credits a outstanding outstanding
Mauritiana $ 455 $ 108 $ 347 0.28%
Mauritius 7 - 7 0.01
Moldova 557 133 424 0.34
Mongolia 548 93 455 0.36
Montenegro 92 8 84 0.07
Morocco 12 - 12 0.01
Mozambique 2,274 682 1,592 1.27
Myanmar 803 - 803 0.64
Nepal 2,025 538 1,487 1.19
Nicaragua 579 98 481 0.38
Niger 625 329 296 0.24
Nigeria 7,068 3,073 3,995 3.19
Pakistan 12,779 1,662 11,117 8.87
Papua New Guinea 275 182 93 0.07
Paraguay 13 - 13 0.01
Philippines 172 - 172 0.14
Rwanda 479 155 324 0.26
Samoa 122 19 103 0.08
Sao Tome and Principe 15 - 15 0.01
Senegal 1,726 579 1,147 0.92
Serbia 779 62 717 0.57
Sierra Leone 241 51 190 0.15
Solomon Islands 43 - 43 0.03
Somalia 455 - 455 0.36
Sri Lanka 3,324 611 2,713 2.17
St. Kitts and Nevis 1 - 1 *
St. Lucia 86 24 62 0.05
St. Vincent and the Grenadines 40 18 22 0.02
Sudan 1,324 - 1,324 1.06
Swaziland 2 - 2 *
Syrian Arab Republic 14 - 14 0.01
Tajikistan 398 7 391 0.31
Tanzania 5,280 1,780 3,500 2.79
Thailand 54 - 54 0.04
Tonga 24 - 24 0.02
Tunisia 17 - 17 0.01
Turkey 39 - 39 0.03
Uganda 3,008 1,203 1,805 1.44
Uzbekistan 548 413 135 0.11
Vanuatu 12 - 12 0.01
Vietnam 12,500 4,868 7,632 6.09
Yemen, Republic of 2,387 142 2,245 1.79
Zambia 838 332 506 0.40
Zimbabwe 533 - 533 0.43
Subtotal membersC 163,100 37,997 125,103 99.85

SUMMARY STATEMENT OF DEVELOPMENT CREDITS
June 30, 2011

a
Borrower or guarantor credits credits outstanding outstanding
b
African Trade Insurance Agency $ 11 $ - $ 11 0.01%
Bank Of The States Of Central Africa b 52 27 25 0.02
Caribbean Dev Bank b 22 - 22 0.02
West African Development Bank b 161 35 126 0.10
Subtotal regional development banks 246 62 184 0.15
Others * - * *
Total—June 30, 2011c $163,346 $38,059 $125,287 100.00%
Total—June 30, 2010 $144,170 $30,696 $113,474
* Indicates amounts less than $0.5 million or 0.005 percent.
NOTES
a. Of the undisbursed balance at June 30, 2011, IDA has entered into irrevocable commitments to disburse $463 million ($491
million—June 30, 2010).
b. The development credits to these regional development banks and agencies are for the benefit of members of IDA or
territories of members of IDA.
c. May differ from the sum of individual figures shown due to rounding.

STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND
CONTRIBUTIONS
June 30, 2011

Subscriptions and
Number of Percentage of contributions
a
Member votes total votes committed
Part I Members
Australia 237,476 1.15% $ 3,666.57
Austria 151,598 0.74 1,962.22
Belgium 219,294 1.07 3,574.65
Canada 524,963 2.55 8,943.84
Denmark 187,722 0.91 3,211.83
Estonia 36,150 0.18 4.09
Finland 120,274 0.58 1,311.12
France 790,360 3.84 14,587.43
Germany 1,163,980 5.66 22,225.68
Greece 53,093 0.26 219.32
Iceland 46,379 0.23 49.12
Ireland 72,255 0.35 504.54
Italy 484,642 2.36 8,804.29
Japan 1,790,495 8.70 40,355.04
Kuwait 93,478 0.45 870.35
Latvia 33,956 0.17 0.92
Luxembourg 53,581 0.26 225.18
Netherlands 392,488 1.91 7,322.99
New Zealand 56,431 0.27 293.62
Norway 200,226 0.97 3270.50
Portugal 55,554 0.27 299.56
Russian Federation 60,937 0.30 410.92
Slovenia 44,339 0.22 34.24
South Africa 55,503 0.27 175.22
Spain 199,242 0.97 3,226.89
Sweden 392,816 1.91 6,434.73
Switzerland 228,751 1.11 3,461.05
United Arab Emirates 1,367 0.01 5.58
United Kingdom 1,117,538 5.43 20,268.71
United States 2,270,761 11.03 42,870.14
b
Subtotal Part I Members 11,135,649 54.11% $198,590.33
Part II Members
Afghanistan 54,983 0.27% $ 1.49
Albania 45,667 0.22 0.35
Algeria 83,313 0.40 5.51
Angola 66,866 0.32 8.30
Argentina 134,439 0.65 69.79
Armenia 47,981 0.23 0.69
Azerbaijan 51,627 0.25 1.12
Bahamas, The 46,228 0.22 1.89
Bangladesh 107,859 0.52 7.66
Barbados 46,340 0.23 1.67
Belize 13,653 0.07 0.26
Benin 48,911 0.24 0.76
Bhutan 43,467 0.21 0.08
Bolivia, Plurinational State of 55,614 0.27 1.53
Bosnia and Herzegovina 51,994 0.25 2.53
Botswana 44,980 0.22 1.63
Brazil 306,709 1.49 831.48
Burkina Faso 48,910 0.24 0.78
Burundi 52,038 0.25 1.10
Cambodia 55,249 0.27 1.48
Cameroon 54,982 0.27 1.58
Cape Verde 43,840 0.21 0.13
Central African Republic 48,910 0.24 0.78
Chad 48,910 0.24 0.78
Chile 31,782 0.15 4.47
China 421,071 2.05 112.37
Colombia 92,384 0.45 24.96
Comoros 43,840 0.21 0.13

Subscriptions and
a
Congo, Democratic Republic of 79,399 0.39% $ 4.58
Congo, Republic of 48,910 0.24 0.76
Costa Rica 12,480 0.06 0.25
Côte d’Ivoire 54,982 0.27 1.55
Croatia 64,324 0.31 5.84
Cyprus 52,405 0.25 7.42
Czech Republic 89,272 0.43 95.72
Djibouti 44,816 0.22 0.26
Dominica 43,840 0.21 0.13
Dominican Republic 27,780 0.13 0.58
Ecuador 50,151 0.24 0.94
Egypt, Arab Republic of 92,365 0.45 9.09
El Salvador 46,464 0.23 0.49
Equatorial Guinea 6,167 0.03 0.41
Eritrea 43,969 0.21 0.13
Ethiopia 48,923 0.24 0.71
Fiji 19,462 0.09 0.77
Gabon 2,093 0.01 0.63
Gambia, The 46,108 0.22 0.40
Georgia 51,259 0.25 0.99
Ghana 71,336 0.35 3.13
Grenada 20,627 0.10 0.13
Guatemala 37,396 0.18 0.55
Guinea 33,987 0.17 1.32
Guinea-Bissau 44,500 0.22 0.22
Guyana 52,674 0.26 1.17
Haiti 52,038 0.25 1.11
Honduras 46,457 0.23 0.43
Hungary 139,921 0.68 109.16
India 573,783 2.79 60.84
Indonesia 176,979 0.86 15.85
Iran, Islamic Republic of 15,455 0.08 5.69
Iraq 51,576 0.25 1.04
Israel 67,473 0.33 71.93
Jordan 24,865 0.12 0.41
Kazakhstan 5,685 0.03 1.89
Kenya 63,143 0.31 2.36
Kiribati 43,592 0.21 0.10
Korea, Republic of 142,740 0.69 1,200.69
Kosovo, Republic of 48,357 0.23 0.88
Kyrgyz Republic 47,718 0.23 0.56
Lao People’s Democratic Republic 48,910 0.24 0.73
Lebanon 8,562 0.04 0.56
Lesotho 44,816 0.22 0.24
Liberia 52,038 0.25 1.12
Libya 44,771 0.22 1.44
Macedonia, former Yugoslav Republic of 46,885 0.23 1.11
Madagascar 54,982 0.27 1.42
Malawi 52,038 0.25 1.02
Malaysia 73,397 0.36 5.92
Maldives 43,229 0.21 0.05
Mali 53,345 0.26 1.34
Marshall Islands 4,902 0.02 0.01
Mauritania 48,910 0.24 0.77
Mauritius 53,320 0.26 1.29
Mexico 142,236 0.69 168.71
Micronesia, Federated States of 18,424 0.09 0.03
Moldova 49,684 0.24 0.87
Mongolia 45,667 0.22 0.32
Montenegro 47,096 0.23 0.73
Morocco 85,559 0.42 5.53
Mozambique 59,370 0.29 2.05
Myanmar 67,326 0.33 3.17
Nepal 48,910 0.24 0.74
Nicaragua 46,457 0.23 0.43
Niger 48,910 0.24 0.76

STATEMENT OF VOTING POWER AND SUBSCRIPTIONS AND
CONTRIBUTIONS
June 30, 2011

Subscriptions and
a
Nigeria 83,411 0.41% $ 4.62
Oman 46,580 0.23 1.39
Pakistan 168,679 0.82 14.11
Palau 3,804 0.02 0.02
Panama 10,185 0.05 0.04
Papua New Guinea 48,346 0.23 1.26
Paraguay 29,968 0.15 0.44
Peru 64,322 0.31 2.55
Philippines 103,963 0.51 7.55
Poland 405,835 1.97 90.07
Rwanda 52,038 0.25 1.12
St. Kitts and Nevis 13,778 0.07 0.17
St. Lucia 30,532 0.15 0.23
St. Vincent and the Grenadines 34,787 0.17 0.11
Samoa 43,901 0.21 0.14
São Tomé and Principe 43,719 0.21 0.12
Saudi Arabia 652,965 3.17 2,424.65
Senegal 63,143 0.31 2.62
Serbia 69,507 0.34 7.04
Sierra Leone 52,038 0.25 1.02
Singapore 14,933 0.07 60.73
Slovak Republic 65,977 0.32 21.79
Solomon Islands 43,901 0.21 0.13
Somalia 10,506 0.05 0.95
Sri Lanka 79,436 0.39 4.30
Sudan 54,982 0.27 1.52
Swaziland 19,022 0.09 0.42
Syrian Arab Republic 11,027 0.05 1.20
Tajikistan 47,378 0.23 0.52
Tanzania 63,143 0.31 2.30
Thailand 79,436 0.39 4.74
Timor-Leste 45,123 0.22 0.44
Togo 52,038 0.25 1.14
Tonga 43,714 0.21 0.12
Trinidad and Tobago 59,184 0.29 2.00
Tunisia 2,793 0.01 1.89
Turkey 119,975 0.58 155.44
Tuvalu 504 * 0.02
Uganda 47,092 0.23 2.36
Ukraine 1,762 0.01 7.61
Uzbekistan 57,807 0.28 1.90
Vanuatu 45,152 0.22 0.30
Vietnam 61,168 0.3 2.24
Yemen, Republic of 60,415 0.29 2.16
Zambia 75,427 0.37 3.61
Zimbabwe 92,455 0.45 6.21
b
Subtotal Part II Members 9,443,613 45.89% $ 5,742.03
b
Total—June 30, 2011 20,579,262 100.00% $204,332.36
Total—June 30, 2010 20,037,940 100.00% $199,130.91
* Indicates less than 0.005 percent.

NOTES
a. See Notes to Financial Statements—Note A for an explanation of the two categories of membership.
b. May differ from the sum of individual figures shown due to rounding.

NOTES TO FINANCIAL STATEMENTS
PURPOSE AND AFFILIATED and the determination of the adequacy of the
ORGANIZATIONS accumulated provisions for debt relief and losses on
development credits and other exposures
The International Development Association (IDA) is
(irrevocable commitments, guarantees and repaying
an international organization established in 1960.
project preparation facilities).
IDA’s main goal is reducing poverty through
promoting sustainable economic development in the Certain reclassifications of the prior years’
less developed countries of the world that are information have been made to conform with the
members of IDA, by extending concessionary current year’s presentation. In particular, as
financing in the form of grants, development credits permitted under U.S. GAAP, IDA reclassified
and guarantees, and by providing related technical amounts relating to Nonnegotiable, noninterest-
assistance. The activities of IDA are complemented bearing demand obligations on account of members’
by those of three affiliated organizations, the subscriptions and contributions of $7,044 million as
International Bank for Reconstruction and of June 30, 2010 from Assets to Equity. In addition,
Development (IBRD), the International Finance IDA previously reported the purchases and sales of
Corporation (IFC), and the Multilateral Investment Mortgage Backed Securities To-Be-Announced
Guarantee Agency (MIGA). Each of these (TBAs) on a gross basis as part of Investments-
organizations is legally and financially independent Trading. Since these instruments meet the definition
from IDA, with separate assets and liabilities, and of derivative instruments, IDA has reclassified
IDA is not liable for their respective obligations. amounts related to TBAs to derivative assets and
Transactions with these affiliates are disclosed in the derivative liabilities. The effect of the
notes that follow. The principal purpose of IBRD is reclassification on the June 30, 2010 balance sheet
to promote sustainable economic development and was a $329 million decrease in Investments-
reduce poverty in its member countries, primarily by Trading, $147 million decrease in Receivable from
providing loans, guarantees and related technical investment securities traded, $473 million decrease
assistance for specific projects and for programs of in Payable from investment securities purchased,
economic reform in developing member countries. and $3 million increase in Derivative assets-
IFC's purpose is to encourage the growth of Investments. These reclassifications had no effect on
productive private enterprises in its member IDA's Net loss for the fiscal year ended June 30,
countries through loans and equity investments in 2010.
such enterprises without a member's guarantee.
On August 4, 2011, the Executive Directors
MIGA’s purpose is to encourage the flow of
approved these financial statements for issue, which
investments for productive purposes between
was also the date through which IDA’s management
member countries and, in particular, to developing
evaluated subsequent events.
member countries by providing guarantees against
noncommercial risks for foreign investment in its Translation of Currencies
developing member countries.
IDA’s financial statements are expressed in terms of
IDA is immune from taxation pursuant to Article U.S. dollars for the purpose of summarizing IDA’s
VIII, Section 9, Immunities from Taxation, of IDA’s financial position and the results of its operations for
Articles of Agreement. the convenience of its members and other interested
parties.
NOTE A—SUMMARY OF SIGNIFICANT
ACCOUNTING AND RELATED POLICIES IDA conducts its operations in Special Drawing
Rights (SDRs) and the SDR’s component currencies
IDA’s financial statements are prepared in
of U.S. dollar, euro, Japanese yen and pound
conformity with the accounting principles generally sterling. These comprise the functional currencies of
accepted in the United States of America (U.S. IDA.
GAAP).
Assets and liabilities are translated at market
The preparation of financial statements in exchange rates in effect at the end of the accounting
conformity with U.S. GAAP requires management period, except Members’ Subscriptions and
to make estimates and assumptions that affect the
Contributions which are translated in the manner
reported amounts of assets and liabilities and described below. Income and expenses are
disclosure of contingent assets and liabilities at the translated at either the market exchange rates in
date of the financial statements and the reported
effect on the dates of income and expense
amounts of income and expenses during the recognition, or at an average of the exchange rates
reporting period. Actual results could differ from
in effect during each month. Translation adjustments
these estimates. Significant judgments have been relating to the revaluation of development credits,
used in the valuation of certain financial instruments development grants payable and all other assets and

liabilities denominated in either SDR or the contribution amounts in cash before they become
component currencies of SDR, are reflected in due, and thereby receiving discounts. In addition,
Accumulated Other Comprehensive Income. some replenishment arrangements have incorporated
Translation adjustments relating to non-functional an accelerated encashment schedule. In these cases,
currencies are reported in the Statement of Income. IDA and the donor agree that IDA will invest the
cash and retain the income with the donor receiving
Members’ Subscriptions and Contributions
voting rights for the full undiscounted amount.
Recognition Subscriptions and Contributions committed are
Members’ Subscriptions and Contributions recorded at the full undiscounted amount.
committed for each IDA replenishment are initially Subscriptions and Contributions paid-in are
recorded both as Subscriptions and Contributions recorded net of discounts.
committed and, correspondingly, as Subscriptions For the purposes of its financial resources, the
and Contributions receivable. Prior to effectiveness, membership of IDA is divided into two categories:
only a portion of the value of Instruments of (1) Part I members, which make payments of
Commitment (IoCs) received as specified in the subscriptions and contributions provided to IDA in
replenishment resolution is recorded as convertible currencies that may be freely used or
Subscriptions and Contributions committed. Upon exchanged by IDA in its operations and (2) Part II
effectiveness, the remainder of the value of IoCs members, which make payments of ten percent of
received is subsequently recorded as Subscriptions their initial subscriptions in freely convertible
and Contributions committed. currencies, and the remaining 90 percent of their
IoCs can contain unqualified or qualified initial subscriptions, and all additional subscriptions
commitments. Under an unqualified commitment, a and contributions in their own currencies or in freely
contributing member agrees to pay a specified convertible currencies. Certain Part II members
amount of its subscription and contribution without provide a portion of their subscriptions and
requiring appropriation legislation. A qualified contributions in the same manner as mentioned in
commitment is subject to the contributing member (1) above. IDA’s Articles of Agreement and
obtaining the necessary appropriation legislation. subsequent replenishment resolutions provide that
Subscriptions and contributions made under IoCs the currency of any Part II member paid in by it may
become available for commitment for development not be used by IDA for projects financed by IDA
credits, grants, and guarantees by IDA for a and located outside the territory of the member
particular replenishment in accordance with the IDA except by agreement between the member and IDA.
commitment authority framework as approved by The national currency portion of subscriptions of
the Executive Directors. Part II members is recorded as restricted under
Members’ Subscriptions and Contributions unless
A replenishment becomes effective when IDA released under an agreement between the member
receives IoCs from members whose subscriptions and IDA or used for administrative expenses. The
and contributions aggregate to a specified portion of cash paid and notes deposited in nonconvertible
the full replenishment. Amounts not yet paid in at local currencies for the subscriptions of Part II
the date of effectiveness, are recorded as members are recorded either as currencies subject to
Subscriptions and Contributions receivable and restriction under Due from Banks, or as restricted
shown as a reduction of Subscriptions and notes included under Non-negotiable, noninterest-
Contributions committed. These receivables become bearing demand obligations on account of member
due throughout the replenishment period (generally subscriptions and contributions.
three years) in accordance with an agreed payment
schedule. The actual payment of receivables when Following adoption by the Board of Governors on
they become due may be subject to the budgetary April 21, 2006 of a resolution authorizing additions
appropriation processes for certain members. to IDA’s resources to finance the MDRI, pledges
received in the form of IoCs for financing the MDRI
The Subscriptions and Contributions receivable are are recorded and accounted for in their entirety.
settled through payment of cash or deposit of Therefore, the full value of all IoCs received is
nonnegotiable, noninterest-bearing demand notes. recorded as subscriptions and contributions.
The notes are encashed by IDA on an approximately Correspondingly, the IoCs are also recorded as
pro rata basis either as provided in the relevant Subscriptions and Contributions Receivable and
replenishment resolution over the disbursement deducted from equity.
period of the development credits and grants
committed under the replenishment, or as needed. Under IDA’s Articles of Agreement, a member may
withdraw from membership in IDA at any time.
In certain replenishments, donors have had the When a government ceases to be a member, it
option of paying all of their subscription and remains liable for all financial obligations

undertaken by it to IDA, whether as a member, Maintenance of Value
borrower, guarantor or otherwise. The Articles
Article IV, Section 2(a) and (b) of IDA’s Articles of
provide that upon withdrawal, IDA and the
Agreement provides for maintenance of value
government shall proceed to a settlement of
payments on account of the local currency portion
accounts. If agreement is not reached within six
of the initial subscription whenever the par value of
months, standard arrangements are provided. Under
the member’s currency or its foreign exchange value
these arrangements, IDA would pay to the
has, in the opinion of IDA, depreciated or
government the lower of the member’s total paid-in
appreciated to a significant extent, so long as, and to
subscriptions and contributions or the member’s
the extent that, such currency shall not have been
proportionate share of IDA’s net assets. These funds
initially disbursed or exchanged for the currency of
would be paid as a proportionate share of all
another member. The provisions of Article IV,
principal repayments received by IDA on
Section 2(a) and (b) have by agreement been
development credits made during the period of the
extended to cover additional subscriptions and
government’s membership.
contributions of IDA through the Third
Valuation of Subscriptions and Contributions Replenishment, but are not applicable to those of the
Fourth and subsequent replenishments.
The subscriptions and contributions provided
through the Third Replenishment are expressed in The Executive Directors decided on June 30, 1987
terms of “U.S. dollars of the weight and fineness in that settlements of maintenance of value, which
effect on January 1, 1960” (1960 dollars). Following would result from the resolution of the valuation
the abolition of gold as a common denominator of issue on the basis of the 1974 SDR, would be
the monetary system and the repeal of the provision deferred until the Executive Directors decide to
of the U.S. law defining the par value of the U.S. resume such settlements. These amounts are shown
dollar in terms of gold, the pre-existing basis for as Deferred Amounts to Maintain Value of Currency
translating 1960 dollars into current dollars or any Holdings and deducted from equity; any changes
other currency disappeared. The Executive Directors relate solely to translation adjustments.
of IDA decided, that until such time as the relevant
provisions of the Articles of Agreement are Nonnegotiable, Noninterest-bearing Demand
amended, the words “U.S. dollars of the weight and Obligations on Account of Members’
fineness in effect on January 1, 1960” in Article II, Subscriptions and Contributions
Section 2(b) of the Articles of Agreement of IDA Payments on these instruments are due to IDA upon
are interpreted to mean the SDR introduced by the demand and are held in bank accounts which bear
International Monetary Fund as the SDR was valued IDA’s name. These instruments are carried and
in terms of U.S. dollars immediately before the reported at face value as a reduction to equity on the
introduction of the basket method of valuing the Balance Sheet.
SDR on July 1, 1974, such value being equal to
$1.20635 for one SDR (the 1974 SDR). The Development Credits
Executive Directors also decided to apply the same In fulfilling its mission, IDA makes concessional
standard of value to amounts expressed in 1960 development credits to the poorest countries. These
dollars in the relevant resolutions of the Board of development credits are made to, or guaranteed by,
Governors. member governments or to the government of a
The subscriptions and contributions provided territory of a member (except for development
credits which have been made to regional
through the Third Replenishment are expressed on
the basis of the 1974 SDR. Prior to the decision of development institutions for the benefit of members
the Executive Directors, IDA had valued these or territories of members of IDA). In order to
qualify for lending on IDA terms, a country’s per
subscriptions and contributions on the basis of the
SDR at the current market value of the SDR. capita income must be below a certain cut-off level
($1,165 for FY2011 and $1,135 for FY2010) and
The subscriptions and contributions provided under the country may have only limited or no
the Fourth Replenishment and thereafter are creditworthiness for IBRD lending.
expressed in members’ currencies or SDRs and are
payable in members’ currencies. Subscriptions and Development credits are carried in the financial
statements at amortized cost, less an accumulated
contributions made available for disbursement in
cash to IDA are translated at market exchange rates provision for debt relief and development credit
in effect on the dates they were made available. losses, plus the deferred development credits
Subscriptions and contributions not yet available for origination costs.
disbursements are translated at market exchange
rates in effect at the end of the accounting period.

Commitment charges on the undisbursed balance of purchase of oral vaccines from the proceeds of
development credits, when applicable, are development credits, which are subsequently
recognized in income as accrued. converted to grant terms under IDA’s “buy-down
mechanism”, upon attainment of agreed
Incremental direct costs associated with originating
performance goals.
development credits are capitalized and amortized
over the term of the credit. Pursuant to the applicable buy-down terms, IDA
enters into an arrangement with third party donors
It is IDA’s practice not to reschedule service charge,
who make payments on the borrower’s service and
interest or principal payments on its development
commitment charges through a trust fund until the
credits or participate in debt rescheduling
borrower reaches agreed performance goals. At that
agreements with respect to its development credits.
time, IDA sells the related credits to the trust fund
It is the policy of IDA to place in nonaccrual status for an amount equivalent to the present value of the
all development credits made to, or guaranteed by, a remaining cash flows of the related credits, based on
member government or to the government of a appropriate discount rates. The trust fund
territory of a member if principal or charges with subsequently cancels the purchased credits, thereby
respect to any such development credit are overdue converting them to grant terms.
by more than six months, unless IDA’s management
The difference between the carrying amount of the
determines that the overdue amount will be
development credit sold and the amount received is
collected in the immediate future. In addition, if
recognized as an expense by way of write-off in
loans by IBRD to a member government are placed
IDA’s Statement of Income.
in nonaccrual status, all development credits to that
member government will also be placed in Development Grants
nonaccrual status by IDA. On the date a member’s Development grants are charged to income, and a
development credits are placed in nonaccrual status, liability recognized, upon approval by IDA’s
outstanding charges that had accrued on
Executive Directors.
development credits that remained unpaid are
deducted from the income from development credits Project Preparation Advances
of the current period. Income on nonaccrual
Project preparation advances (PPAs) are advances
development credits is included in income only to
made to borrowers to finance project preparation
the extent that payments have actually been received
costs pending the approval of follow-on
by IDA. If collectibility risk is considered to be
development operations. These amounts are charged
particularly high at the time of arrears clearance, the
to income upon approval by management. To the
member’s development credits may not
extent there are follow-on development credits or
automatically emerge from nonaccrual status, even
grants, these PPAs are refinanced out of the
though the member’s eligibility for new credits may
proceeds of the development credits and grants.
have been restored in such instances. In such
Accordingly, the PPA grant expenses initially
instances, a decision on the restoration of accrual
charged to income are reversed upon approval of the
status is made on a case-by-case basis after a
follow-on development grants, or at the
suitable period of payment or policy performance
effectiveness of the follow-on development credits.
has passed from the time of arrears clearance.
Guarantees
The repayment obligations of IDA’s development
credits funded from resources through the Fifth IDA provides guarantees for credits issued in
Replenishment are expressed in the development support of projects located within a member country
credit agreements in terms of 1960 dollars. In June that are undertaken by private entities. These
1987, the Executive Directors decided to value those financial guarantees are commitments issued by
development credits at the rate of $1.20635 per 1960 IDA to guarantee payment performance by a
dollar on a permanent basis. Development credits borrower to a third party in the event that a member
funded from resources provided under the Sixth government (or government-owned entity) fails to
Replenishment and thereafter are denominated in perform its contractual obligations with respect to a
SDRs; the principal amounts disbursed under such private project.
development credits are to be repaid in currency
Guarantees are regarded as outstanding when the
amounts currently equivalent to the SDRs disbursed.
underlying financial obligation of the borrower is
Sale of Credits Under Buy-down Mechanism incurred, and called when a guaranteed party
demands payment under the guarantee. IDA would
The Investment Partnership for Polio program to
be required to perform under its guarantees if the
fund the immunization of children in high-risk polio
payments guaranteed are not made by the borrower
countries has a funding mechanism that allows the

and the guaranteed party called the guarantee by relief provided by writing off the principal and
demanding payment from IDA in accordance with charges during a replenishment, the donors
the terms of the guarantee. compensate IDA for the forgone reflows through
additional contributions in the relevant
At inception of the guarantees, IDA records the fair
replenishment.
value of the obligation to stand ready and a
corresponding asset, included in Accounts payable MDRI
and miscellaneous liabilities and Other Assets,
In June 2006, the Executive Directors approved the
respectively, on the Balance Sheet.
implementation of the MDRI commencing July 1,
In the event that a guarantee is called, IDA has the 2006. Debt relief provided under the MDRI, which
contractual right to require payment from the is characterized by the write-off of eligible
member country that has provided the counter development credits upon qualifying borrowers
guarantee to IDA, on demand, or as IDA may reaching the HIPC Completion Point date, is in
otherwise direct. addition to existing debt relief commitments
provided by IDA and other creditors under the HIPC
Guarantee fee income received is deferred and
Debt Initiative. Specifically, for forgone reflows
amortized over the life of the guarantee.
under MDRI, donors established a separate MDRI
IDA records a contingent liability for the probable replenishment spanning four decades (FY2007-44)
losses related to guarantees outstanding. This and pledged to compensate IDA for the costs of
provision, as well as the unamortized balance of the providing debt relief under MDRI on a “dollar-for-
deferred guarantee fee income, and the unamortized dollar” basis. These additional resources are
balance of the obligation to stand ready, are accounted for as subscriptions and contributions.
included in Accounts payable and miscellaneous
Accumulated Provision for Debt Relief and
liabilities on the Balance Sheet.
Losses on Development Credits and Other
HIPC Debt Initiative Exposures
The HIPC Debt Initiative was launched in 1996 as a Accumulated Provision for HIPC Debt Initiative
joint effort by bilateral and multilateral creditors to and MDRI
ensure that reform efforts of HIPCs would not be The adequacy of the accumulated provision for the
put at risk by unsustainable external debt burdens. HIPC Debt Initiative and MDRI is based on both
Under the Enhanced HIPC Framework, which was quantitative and qualitative analyses of various
approved by IDA’s Executive Directors in FY2000, factors, including estimates of decision and
implementation mechanisms include: (i) partial completion point dates. IDA periodically reviews
forgiveness of IDA debt service as it comes due, and these factors and reassesses the adequacy of the
ii) in the case of countries with a substantial amount accumulated provision for the HIPC Debt Initiative
of outstanding IBRD debt, partial refinancing by and MDRI. Adjustments to the accumulated
IDA resources (excluding transfers from IBRD) of provision are recorded as a charge against or
outstanding IBRD debt. addition to income.
Upon signature by IDA of the country specific legal Upon approval by the Executive Directors of IDA of
notification, immediately following the decision by debt relief for a country under the Enhanced HIPC
the Executive Directors of IDA to provide debt Initiative, the principal component of the estimated
relief to the country (the Decision Point), the debt relief costs is recorded as a reduction of the
country becomes eligible for debt relief up to the disbursed and outstanding development credits
nominal value equivalent of one third of the net under the accumulated provision for debt relief, and
present value of the total HIPC debt relief as a charge to income. This estimate is subject to
committed to the specific country. A Completion periodic revision. The accumulated provision for
Point is reached when the conditions specified in the HIPC Debt Initiative is written off as and when debt
legal notification are met and the country’s other relief is provided by IDA.
creditors have confirmed their full participation in Following the Executive Directors' approval of
the debt relief initiative. When the country reaches IDA's participation in the MDRI in June 2006, IDA
its Completion Point, IDA’s commitment to provide provided in full for the estimated probable write-off
the total debt relief for which the country is eligible, of the principal component of debt relief to be
becomes irrevocable. delivered under the MDRI for the HIPC eligible
Donors compensate IDA on a “pay-as-you-go” basis countries confirmed by the Executive Directors as
to finance IDA’s forgone credit reflows under the eligible for relief at that time.
HIPC Debt Initiative. This means that for the debt

The provision is recorded as a reduction of the and IBRD, with the highest severity associated with
disbursed and outstanding development credits IDA. Borrower’s eligibility is assessed at least
under the accumulated provision for debt relief and annually. This methodology is also applied to
as a charge against income. The applicable countries with exposures in nonaccrual status.
development credits are written off when the Generally, all exposures in nonaccrual status have
country reaches the Completion Point and the the same risk rating.
related provision reduced accordingly.
The determination of borrowers' ratings is based on
Accumulated Provision for Losses on Development both quantitative and qualitative analyses of various
Credits and Other Exposures factors. IDA periodically reviews these factors and
reassesses the adequacy of the accumulated
Delays in receiving development credit payments
provision accordingly. Adjustments to the
result in present value losses to IDA since it does
accumulated provision are recorded as a charge
not charge fees or additional interest on any overdue
against or addition to income.
service charges or interest. These present value
losses are equal to the difference between the Statement of Cash Flows
present value of payments of service charges,
For the purpose of IDA's Statement of Cash Flows,
interest and other charges made according to the
cash is defined as the amount of unrestricted
related development credit’s contractual terms and
currencies Due from Banks.
the present value of its expected future cash flows.
Except for debt relief provided under the HIPC Debt Investments
Initiative and MDRI, it is IDA’s practice not to
Investment securities are classified based on
write off its development credits. To date, no
management’s intention on the date of purchase,
development credits have been written off, other
their nature, and IDA’s policies governing the level
than under the HIPC Debt Initiative and MDRI.
and use of such investments. At June 30, 2011 and
Notwithstanding IDA’s historical experience, the
June 30, 2010, all investment securities were held in
risk of losses associated with nonpayment of
a trading portfolio. Investment securities and related
principal amounts due is included in the
financial instruments held in IDA’s trading portfolio
accumulated provision for losses on development
are carried and reported at fair value. The first-in
credits and other exposures (exposures).
first-out method is used to determine the cost of
Management determines the appropriate level of securities sold in computing the realized gains and
accumulated provision for losses, which reflects the losses on these instruments. Unrealized gains and
probable losses inherent in IDA’s exposures. losses for investment securities and related financial
Probable losses comprise estimates of losses arising instruments held in the trading portfolio are included
from default and nonpayment of principal amounts in income. Derivative instruments used in liquidity
due, as well as present value losses. management are not designated as hedging
Several steps are taken to determine the appropriate instruments.
level of provision. First, the exposures are Securities Purchased Under Resale Agreements,
disaggregated into two groups: exposures in accrual Securities Lent Under Securities Lending
status and exposures in nonaccrual status. In each Agreements and Securities Sold Under
group, the net exposures for each borrower (defined Repurchase Agreements and Payable for Cash
as the nominal amount of development credits Collateral Received
disbursed and outstanding less the accumulated
Securities purchased under resale agreements,
provision for debt relief under the HIPC Debt Relief
securities lent under securities lending agreements,
Initiative and MDRI plus other applicable
and securities sold under repurchase agreements are
exposures) are then assigned the credit risk rating of
recorded at face value which approximates fair
that borrower. With respect to countries with
value. IDA receives securities purchased under
exposures in accrual status, these exposures are
resale agreements, monitors the fair value of the
grouped according to the assigned borrower risk
securities and, if necessary, closes out transactions
rating. Each risk rating is mapped to an expected
and enters into new repriced transactions. The
default frequency (probability of default to IDA)
securities transferred to counterparties under the
based on historical experience. The provision
repurchase and security lending arrangements and
required is calculated by multiplying the net
the securities transferred to IDA under the resale
exposures by the expected default frequency and by
agreements have not met the accounting criteria for
the assumed severity of loss given default. The
treatment as a sale. Therefore, securities transferred
severity of loss given default, which is assessed
under repurchase agreements and security lending
periodically, is dependent on the borrower’s
arrangements are retained as assets on IDA's balance
eligibility, namely: IDA, Blend (IBRD and IDA)
sheet, and securities received under resale

agreements are not recorded on IDA's Balance similar assets or liabilities in active
Sheet. markets; quoted prices for identical or
similar assets or liabilities in non-active
Accounting for Derivatives
markets; or pricing models for which all
IDA has elected not to designate any hedging significant inputs are observable, either
relationships for accounting purposes. Rather, all directly or indirectly for substantially the
derivative instruments are marked to fair value on full term of the asset or liability.
the Balance Sheet, with changes in fair value
Level 3: Financial assets and liabilities whose
accounted for through the Statement of Income.
The presentation of IDA’s derivative instruments is values are based on prices or valuation
consistent with the manner in which these techniques that require inputs that are both
instruments are settled. unobservable and significant to the overall
fair value measurement.
Valuation of Financial Instruments
IDA’s policy is to recognize transfers in and
Derivative financial instruments and investment transfers out of levels as of the end of the reporting
securities are recorded in IDA’s financial statements period in which they occur.
at fair value.
Transfers and Grants
IDA has an established and documented process for
determining fair values. Fair value is based upon Transfers from IBRD’s net income and grants made
quoted market prices for the same or similar from the retained earnings of IFC to IDA are
recorded through IDA’s Statement of Income and
securities, where available. Financial instruments for
which quoted market prices are not readily available are receivable upon approval by the Board of
are valued based on discounted cash flow models. Governors of IBRD and execution of a grant
agreement between IFC and IDA, respectively. In
These models primarily use market-based or
independently sourced market parameters such as addition, IDA periodically receives transfers from
yield curves, interest rates, foreign exchange rates trust funds and private institutions. IDA does not
assign any voting rights for these transfers and
and credit curves, and may incorporate unobservable
inputs. Selection of these inputs may involve some grants.
judgment. To ensure that the valuations are Temporary restrictions relating to these transfers
appropriate where internally-developed models are may arise from the timing of receipt of cash, or
used, IDA has various controls in place, which donor imposed restrictions as to use. When the cash
include both internal and periodic external is received and any other restrictions on the transfers
verification and review. and grants are complied with, the temporary
As of June 30, 2011, and June 30, 2010, IDA had no restrictions are removed.
financial assets or liabilities measured at fair value Accounting and Reporting Developments
on a non-recurring basis.
The Financial Accounting Standards Board’s
Fair Value Hierarchy (FASB) Accounting Standards Update (ASU) No.
2010-11, Derivatives and Hedging (Topic 815):
Financial instruments are categorized based on the
priority of the inputs to the valuation technique. The Scope Exception Related to Embedded Credit
fair value hierarchy gives the highest priority to Derivatives became effective on July 1, 2010. The
ASU clarifies the scope exception related to
quoted prices in active markets for identical assets
or liabilities (Level 1), the next highest priority to embedded credit derivatives by narrowing it to
observable market-based inputs or inputs that are apply to those embedded credit derivatives where
the transfer of credit risk is only in the form of
corroborated by market data (Level 2) and the
lowest priority to unobservable inputs that are not subordination of one financial instrument to another,
corroborated by market data (Level 3). with all other embedded credit derivatives required
to be analyzed for potential bifurcation and separate
Financial assets and liabilities recorded at fair value
on the Balance Sheet are categorized based on the accounting. IDA was not affected by this ASU as it
inputs to the valuation techniques as follows: does not have any embedded credit derivatives.
FASB’s ASU No.2009-16, Accounting for Transfers
Level 1: Financial assets and liabilities whose
values are based on unadjusted quoted of Financial Assets - an Amendment of FAS 140
prices for identical assets or liabilities in became effective on July 1, 2010. This guidance
eliminates the concept of a “qualified special
active markets.
purpose entity” and addresses the information that a
Level 2: Financial assets and liabilities whose reporting entity provides in its financial reports
values are based on quoted prices for about transfers of financial assets including: the

effect of transfers on its financial position, financial effective control by focusing on the transferor’s
performance and cash flows; and a transferor’s contractual rights and obligations and removing the
continuing involvement in transferred assets. The criterion to assess its ability to exercise those rights
adoption of this ASU resulted in additional or honor those obligations. For IDA, this ASU is
qualitative disclosures relating to securities lending effective for the first interim or annual period
under Note C—Investments. beginning on or after December 15, 2011. IDA
currently accounts for all transfers of securities as
FASB’s ASU No. 2009-17, Improvements to
secured borrowing and is therefore not expected to
Financial Reporting by Enterprises Involved with
be affected by this ASU.
Variable Interest Entities, which amends existing
guidance for consolidation of variable interest
In May 2011, the FASB issued ASU 2011-04, Fair
entities, also became effective on July 1, 2010. This
Value Measurement (Topic 820): Amendments to
ASU did not have an impact on IDA’s financial
Achieve Common Fair Value Measurement and
statements.
Disclosure Requirements in U.S. GAAP and
In July 2010, the FASB issued ASU No. 2010-20, International Financial Reporting Standards
Disclosures about the Credit Quality of Financing (IFRSs). The amendments result in common fair
Receivables and the Allowance for Credit Losses. value measurement and disclosure requirements in
The ASU expands credit quality disclosure U.S. GAAP and IFRSs. While many of the
requirements to include more detailed information amendments relate to the harmonization of
regarding financing receivables and the allowance terminology and are not expected to significantly
for credit losses, as well as additional information impact current practice, some of the amendments
regarding accounting policies and methodology. change the existing fair value measurement and
Although the expanded disclosures are effective for disclosure requirements. For IDA, this ASU is
IDA’s annual reporting periods ending on or after effective for annual periods beginning after
December 15, 2011, IDA early adopted the ASU December 15, 2011. IDA is currently evaluating the
with effect from the quarter ended December 31, impact of this ASU on its financial statements.
2010, and provides interim and annual disclosures
In June 2011, the FASB issued ASU 2011-05,
(see Note E—Development Credits and Other
Comprehensive Income (Topic 220): Presentation of
Exposures).
Comprehensive Income. The ASU requires
In July 2010, the Dodd-Frank Wall Street Reform comprehensive income to be reported in either a
and Consumer Protection Act (the Act) became law single statement or in two consecutive statements.
in the United States. The Act seeks to reform the The ASU does not change what items are reported
U.S. financial regulatory system by introducing new in other comprehensive income or existing
regulators and extending regulation over new requirements to reclassify items from other
markets, entities, and activities. The implementation comprehensive income to net income. For IDA, this
of the Act is dependent on the development of ASU is effective for fiscal years ending after
various rules to clarify and interpret its December 15, 2012, and interim and annual periods
requirements. Pending the development of these thereafter. IDA is currently evaluating the impact of
rules, no impact on IDA has been determined as of this ASU on its financial statements.
June 30, 2011. IDA continues to evaluate the
potential future implications of the Act.
In April 2011, FASB issued ASU No. 2011-02,
Receivables: A Creditor’s Determination of Whether
a Restructuring Is a Troubled Debt Restructuring.
The ASU clarifies criteria to be considered in
evaluating whether a restructuring of a receivable
constitutes a troubled debt restructuring. For IDA,
this ASU is effective for annual periods ending on
or after December 15, 2012, with early adoption
permitted. As it is IDA's practice not to restructure
its development credits, this ASU is not expected to
have an impact on its financial statements.
In April 2011, the FASB issued ASU 2011-03,
Transfers and Servicing (Topic 860):
Reconsideration of Effective Control for Repurchase
Agreements. The ASU changes the assessment of

NOTE B—MEMBERS’ SUBSCRIPTIONS AND
CONTRIBUTIONS
The allocation to Switzerland represents the
The Sixteenth Replenishment of IDA’s Resources discount given to Switzerland when they became a
(IDA16): The Board of Governors adopted the member of IDA. Switzerland had provided $580
resolution approving IDA16 on April 26, 2011. million in co-financing grants to IDA borrowers
During the IDA16 period, which spans from July 1, before it became a member of IDA. These grant
2011 to June 30, 2014, IDA is expected to provide contributions were converted to IDA subscriptions
concessional financing of SDR 32.8 billion ($52.5 and contributions upon membership at $512 million,
billion using June 30, 2011 exchange rates). IDA16 representing the present value of the future reflows
will become effective when IDA has received IoCs of the co-financing grants had they been made
for subscriptions and contributions from donors of through IDA on IDA's repayment terms existing
not less than SDR 10.4 billion ($16.6 billion). then.
Donor Financing of MDRI: As of June 30, 2011,
Subscriptions and Contributions Paid-In: The
donor commitments to the MDRI stood at $30,238
movement in Subscriptions and Contributions Paid-
million at the agreed replenishment foreign
In during the fiscal years ended June 30, 2011 and
exchange reference rates, representing 85% of the
June 30, 2010 is summarized below:
total financing requirements based on the latest cost
In millions of U.S. dollars estimates for the MDRI. Of the cumulative donor
June 30, June 30, commitments, $7,237 million were unqualified and
2011 2010 $23,001 million were qualified, with unqualified
Beginning of the fiscal year $157,413 $150,085 donor commitments covering 20% of the total costs.
Cash contributions received 1,724 1,744
Demand obligations received 7,549 5,908 NOTE C—INVESTMENTS
Translation adjustment 924 (324)
End of the fiscal year $167,610 $157,413 The investment securities held by IDA are
designated as trading and are carried and reported at
fair value, or at face value which approximates fair
Subscriptions and Contributions Paid-In as of June value. As of June 30, 2011, the majority of
30, 2011 include $37 million related to IDA16. Investments-trading comprises government and
During the fiscal year ended June 30, 2011, IDA agency obligations (63%), with almost all the
encashed demand obligations totaling $5,856 instruments being classified as either Level 1 or
million ($6,986 million—fiscal year ended June 30, Level 2 for the purposes of the fair value hierarchy
2010). classification.
Cumulative Discounts on Subscriptions and The majority of the instruments in Investments-

Contributions: At June 30, 2011, the cumulative trading are denominated in U.S. dollars, Euro,
discounts on Subscriptions and Contributions totaled Pounds sterling and Japanese yen (47%, 33%, 10%
$2,212 million ($1,993 million—June 30, 2010) and and 9%, respectively). IDA uses derivative
comprised the following: instruments to align the currency composition of the
investment portfolio to the SDR basket of currencies
In millions of U.S. dollars and to manage other currency and interest rate risks
June 30, 2011 June 30, 2010
Discounts on Advance in the portfolio. After considering the effects of
Subscriptions and these derivatives, the investment portfolio has an
Contributions $1,700 $1,481 average repricing of 2.6 years and the following
Allocation to Switzerland 512 512 currency composition: U.S. dollars (48%), Euro
Cumulative discounts $2,212 $1,993 (33%), Pounds sterling (10%) and Japanese yen
(9%).

Investments – Trading
A summary of IDA’s Investments-trading and the currency composition at June 30, 2011 and June 30, 2010, is as
follows:
Carrying Value
June 30, 2011 June 30, 2010
Investments—Trading
Government and agency obligations $18,683 $19,425
Time deposits 9,651 4,668
Asset-backed securities 1,484 1,918
Total $29,818 $26,011

June 30, 2011 June 30, 2010
Average Repricing Average Repricing
a a
Carrying value (years) Carrying value (years)
Euro $ 9,804 2.53 $ 7,722 3.08
Japanese yen 2,587 2.15 3,476 2.36
Pounds sterling 3,052 2.28 2,684 2.36
U.S. dollars 14,051 2.03 12,023 2.58
Other 324 0.06 106 0.05
Total $29,818 2.21 $26,011 2.66
a. The average repricing represents the remaining period to the contractual repricing or maturity date, whichever is earlier. This
indicates the average length of time for which interest rates are fixed.
Net Investment Portfolio
IDA manages its investments on a net portfolio basis. The following tables summarize IDA’s net portfolio position
and currency composition as of June 30, 2011 and June 30, 2010:
Carrying Value
June 30, 2011 June 30, 2010
Investments—Trading $29,818 $26,011
Securities purchased under resale agreements - 3
Securities sold under repurchase agreements, securities lent under
securities lending agreements, and payable for cash collateral received (6,013) (4,970)
Derivatives Assets
Currency forward contracts 302 100
Interest rate swaps 2 3
a
Other * 3
Total 304 106
Derivatives Liabilities
Currency forward contracts (305) (100)
Interest rate swaps (3) (3)
a
Other (1) (*)
Total (309) (103)
b
Cash held in investment portfolio 2 2
Receivable from investment securities traded 2,355 1,558
Payable for investment securities purchased (1,285) (968)
Net Investment Portfolio $24,872 $21,639
a. These relate to TBA securities.

b. This amount is included in Unrestricted currencies under Due from Banks on the Balance Sheet.
* - Indicates amount less than $0.5 million.

June 30, 2011 June 30, 2010
Average Average
Carrying value Repricing Carrying value Repricing
a a
(years) (years)
Euro $ 8,268 3.18 $ 6,475 3.54
Japanese yen 2,109 2.72 3,487 2.36
Pounds sterling 2,540 3.30 1,934 4.74
U.S. dollars 11,935 2.36 9,733 3.19
Other 20 * 10 *
Total $24,872 2.73 $21,639 3.25
* Indicates amounts not meaningful.

a. The average repricing represents the remaining period to the contractual repricing or maturity date, whichever is earlier. This
indicates the average length of time for which interest rates are fixed.
IDA uses derivative instruments to manage currency and interest rate risk in the investment portfolio. For details
regarding these instruments, see Note D–Derivative Instruments.
As of June 30, 2011 there were no short sales included in Payable for investment securities purchased on the
Balance Sheet ($21 million—June 30, 2010).
For the fiscal year ended June 30, 2011, IDA had included $340 million of unrealized losses in income (unrealized
gains of $151 million—June 30, 2010 and unrealized gains of $450 million—June 30, 2009).
Fair Value Disclosures
The following tables present IDA’s fair value hierarchy for investment assets and liabilities measured at fair value
on a recurring basis as of June 30, 2011 and June 30, 2010:

Fair Value Measurements on a Recurring Basis
As of June 30, 2011
Level 1 Level 2 Level 3 Total
Assets:
Government and agency obligations $4,936 $13,747 $ - $18,683
Time deposits 3,170 6,481 - 9,651
Asset-backed securities - 1,466 18 1,484
Total Investments – Trading 8,106 21,694 18 29,818
Securities purchased under resale agreements - - - -
Derivative assets-Investments
Currency forward contracts - 302 - 302
Interest rate swaps - 2 - 2
a
Other - * - *
- 304 - 304
Total Investments assets $8,106 $21,998 $18 $30,122
Liabilities:
Securities sold under repurchase agreements and
securities lent under security lending agreements $ - $ 6,013 $ - $6,013
Derivative liabilities-Investments
a
Other - 1 - 1
- 309 - 309
Total Investments liabilities $ - $ 6,322 $- $6,322

* Indicates amount less than $0.5 million.

As of June 30, 2010
Assets:
Government and agency obligations $5,526 $13,899 $ - $19,425
Time deposits 2,295 2,373 - 4,668
Asset-backed securities - 1,905 13 1,918
Total Investments – Trading 7,821 18,177 13 26,011
Securities purchased under resale agreements - 3 - 3
Derivative assets-Investments
a
Other - 3 - 3
- 106 - 106
Total Investments assets $7,821 $18,286 $13 $26,120
Liabilities:
Securities sold under repurchase agreements and
b
securities lent under security lending agreements $ 314 $ 4,654 $- $ 4,968
Derivative liabilities-Investments
a
Other * *
- 103 - 103
Total Investments liabilities $ 314 $ 4,757 - $ 5,071

b. Excludes $2 million relating to payable for cash collateral received.
The following table provide a summary of changes in the fair value of IDA’s Level 3 financial instruments relating
to Investments-Trading during the fiscal years ended June 30, 2011 and June 30, 2010:

Level 3 Financial Instruments
Investments – Trading (Asset-backed securities)
Fiscal Year Ended June 30,
2011 2010
Beginning of the period $13 $71
Total gains or (losses) in net income: 5 11
Purchases 2 2
Sales/Settlements (4) (29)
Transfers in (out), net 2 (42)
End of the period $18 $13
The following table provides information on the unrealized gains or losses included in income for the fiscal years
ended June 30, 2011, June 30, 2010 and June 30, 2009, relating to IDA’s Level 3 financial instruments still held as
of those dates, as well as where those amounts are included in the Statement of Income.
Level 3 Financial Instruments Still Held as of the reporting date
Unrealized Gains (Losses) Investments – Trading (Asset-backed securities)
Statement of Income Location Fiscal Year Ended June 30,
2011 2010 2009
Income: Investments—Trading $5 $6 $(8)

The table below provides the details of all gross inter-level transfers during the fiscal year ended June 30, 2011
and June 30, 2010:
Fiscal Year Ended June 30, 2011
Level 1 Level 2 Level 3
Investments-Trading
Government and Agency obligations
Transfers (out of) into $(404) $404 $ -
Asset-backed securities
Transfers into (out of) - 10 (10)
Transfers (out of)into - (12) 12
$(404) $402 $ 2

Fiscal Year Ended June 30, 2010
Level 1 Level 2 Level 3
Investments-Trading
Government and Agency obligations
Transfers into (out of) $632 $(632) -
Asset-backed securities
Transfers) into (out of - 52 $(52)
Transfers (out of) into - (10) 10
$632 $(590) $(42)
During the fiscal year ended June 30, 2011, the Securities Purchased under Resale Agreements,
transfer of Government and agency obligations Securities Sold under Agreements to Repurchase
totaling $ 404 million from Level 1 to Level 2 and Securities Lent Under Securities Lending
reflected the unavailability of quoted market prices Agreements
for identical instruments, resulting from the
These securities are reported at face value which
decreased volume of trading of these instruments.
approximates fair value.
During the fiscal year ended June 30, 2010, the
transfer of Government and Agency obligations Commercial Credit Risk
totaling $632 million from Level 2 into Level 1 For the purpose of risk management, IDA is party to
reflected the availability of quoted market prices for a variety of financial transactions, certain of which
identical instruments, resulting from the increased involve elements of credit risk. Credit risk exposure
volume of trading of these instruments. represents the maximum potential loss due to
The transfers of Asset-backed securities between possible nonperformance by obligors and
Level 2 and Level 3 during the fiscal years ended counterparties under the terms of the contracts. For
June 30, 2011 and June 30, 2010 were not all securities, IDA limits trading to a list of
significant. authorized dealers and counterparties. In addition,
credit limits have been established for counterparties
Valuation Methods and Assumptions by type of instrument and maturity category.
Summarized below are the techniques applied in Swap Agreements: Credit risk is mitigated through a
determining the fair values of investments. credit approval process, volume limits, monitoring
Investment securities procedures and the use of mark-to-market collateral
arrangements. IDA may require collateral in the
Where available, quoted market prices are used to form of cash or other approved liquid securities from
determine the fair value of trading securities. individual counterparties to mitigate its credit
Examples include futures contracts and most exposure.
government and agency securities. For instruments
for which market quotations are not available, fair IDA has entered into master derivatives agreements
values are determined based on model-based which contain legally enforceable close-out netting
valuation techniques, whether internally-generated provisions. These agreements may further reduce the
or vendor-supplied, that include the standard gross credit risk exposure related to the swaps. The
discounted cash flow method using market reduction in exposure as a result of these netting
observable inputs such as yield curves, credit provisions can vary as additional transactions are
spreads, and prepayment speeds. Unless quoted entered into under these agreements. The extent of
prices are available, time deposits are reported at the reduction in exposure may therefore change
face value which approximates fair value. substantially within a short period of time following
the balance sheet date.
Securities Lending: IDA may engage in securities securities. Transfers of securities by IDA to
lending and repurchases, against adequate collateral, counterparties are not accounted for as sales as the
as well as securities borrowing and reverse accounting criteria for the treatment as a sale have
repurchases (resales) of government and agency not been met. Counterparties are permitted to
obligations, and corporate and asset-backed repledge these securities until the repurchase date.
The following is a summary of the carrying amount of the securities transferred under repurchase or securities
lending agreements, and the related liabilities:

June 30, 2011 June 30, 2010 Financial Statement Presentation
Securities transferred under repurchase or Included under Investments-Trading on the
$4,375 $4,136
securities lending agreements Balance Sheet
Included under Securities Sold Under
Liabilities relating to securities transferred
Repurchase Agreements, Securities Lent under
under repurchase or securities lending $6,013 $4,968
Securities Lending Agreements, and Payable for
agreements
Cash Collateral Received on the Balance Sheet.
At June 30, 2011, the liabilities relating to securities treatment as a sale have not been met. As of June
transferred under repurchase or securities lending 30, 2011, IDA had not received any securities
agreements included $1,599 million ($816 million— (securities with a fair value $3 million—June 30,
June 30, 2010) of repurchase agreement trades that 2010) in connection with resale agreements. None
had not settled at that date. Of this amount, $1,162 of these securities ($Nil— June 30, 2010) had been
million ($712 million—June 30, 2010) represented transferred under repurchase or security lending
replacement trades entered into in anticipation of agreements.
maturing trades.
NOTE D—DERIVATIVE INSTRUMENTS
IDA receives collateral in connection with resale
IDA uses derivative instruments in its investments
agreements. This collateral serves to mitigate IDA's
portfolio and for asset/liability management
exposure to credit risk. The collateral received is in
purposes.
the form of liquid securities and IDA is permitted to
repledge these securities. While these transactions All derivative instruments are classified as Level 2
are legally considered to be true purchases and sales, for the purposes of fair value hierarchy
the securities received are not recorded on IDA's classification.
Balance Sheet as the accounting criteria for
The following table summarizes IDA’s use of authorized derivatives in its various financial portfolios:
Portfolio Derivative instruments used Purpose/Risk being managed

Risk management purposes:
Interest rate swaps, currency forward Manage currency and interest rate risk in the
contracts, options and futures contracts portfolio.
Currency forward contracts and currency Manage foreign exchange risks of future cash
Other assets/liabilities
swaps flows in non-SDR component currencies.
Other purposes:
Assist clients in managing commodity output
Client operations Structured swaps
risks
Under its derivative agreement with IBRD, IDA is proxy for AAA credit rating. As of June 30, 2011,
not required to post collateral as long as it maintains IDA had not posted any collateral with IBRD,
liquidity holdings at pre-determined levels that are a having met the liquidity holdings requirement.

The following tables provide information on the fair value amounts and the location of the derivative instruments
on the Balance Sheet, as well as the notional amounts and credit risk exposures of those derivative instruments, as
of June 30, 2011 and June 30, 2010:
Fair value amounts of the derivative instruments on the Balance Sheet:
Derivative assets Derivative liabilities
Balance Sheet June 30, June 30, Balance Sheet June 30, June 30,
Location 2011 2010 Location 2011 2010
Derivatives not designated
as hedging instruments
Options and Futures-
Investments Other assets $ * $ - Other liabilities $ 1 $ *
Derivative Derivative
Interest rate swaps assets 2 3 liabilities 3 3
Currency forward contracts assets 10,188 4,187 liabilities 10,198 4,244
a
Other assets * 3 liabilities 1 *
Total Derivatives $10,190 $4,193 $10,203 $4,247

Notional amounts and credit risk exposure of the derivative instruments:

June 30, 2011 June 30, 2010
Type of contract
Interest rate swaps
Notional principal $ 40 $ 40
Credit exposure 2 3
a
Exchange traded Options and Futures contracts
Notional long position 698 2,866
Notional short position 3,756 1,538
b
Other
Notional long position 246 310
Notional short position 13 -
Credit exposure * 3
Derivatives—Asset/liability management
Currency forward contracts
Credit exposure 174 135
a. Exchange traded instruments are generally subject to daily margin requirements and are deemed to have no material credit
risk. All outstanding options and future contracts as of June 30, 2011 and June 30, 2010 are interest rate contracts
b These relate to TBA securities.
Amounts of gains and losses on the non-trading derivative instruments and their location on the Statement of
Income for the fiscal years ended June 30, 2011, June 30, 2010 and June 30, 2009 is as follows:
Derivatives not designated as hedging instruments and not held in a trading portfolio
Gains (Losses)
Fiscal Year Ended
Statement of Income Location 2011 2010 2009
Fair value adjustment on non-

Currency forward contracts trading portfolios, net $(101) $(3) $14
a. For alternative disclosures about trading derivatives, see the following table.

All of the instruments in IDA's investment portfolio portfolio is primarily held to ensure the availability
are held for trading purposes. Within the investment of funds to meet IDA's future cash flow
portfolio, IDA holds highly rated fixed income requirements and for liquidity management
instruments as well as derivatives. IDA's investment purposes.
The following table provides information on the amount of gains and losses on the Investments–trading portfolio
(derivative and non-derivative instruments), and their location on the Statement of Income during fiscal years
ended June 30, 2011, June 30, 2010 and June 30, 2009:
Investments—Trading portfolio
Gains (Losses)
Fiscal Year Ended
Statement of Income Location 2011 2010 2009
Type of instrument
Fixed income Investments—Trading $(167) $392 $825

IDA’s fair value hierarchy for derivative assets and liabilities measured at fair value on a recurring basis as of June
30, 2011 and June 30, 2010 is as follows:
As of June 30, 2011
Derivative assets:
Derivative assets
Investments
Currency forward contracts $- $ 302 $- $ 302
a
Other - * - *
- 304 - 304
Asset-liability management
Currency forward contracts - 9,886 - 9,886
Total derivative assets $- $10,190 $- $10,190
Derivative liabilities:
Investments
a
Other - 1 - 1
- 309 309
Currency forward contracts - 9,893 9,893
Total derivative liabilities $- $10,202 $ $10,202
a.These relate to TBA securities.

* Indicates amount less than $0.5 million

As of June 30, 2010
Derivative assets:
Derivative assets
Investments
a
Other - 3 - 3
- 106 - 106
Total derivative assets $- $4,193 $- $4,193
Derivative liabilities:
Investments
a
Other - * - *
- 103 - 103
Total derivative liabilities $- $4,247 $- $4,247

* Indicates amount less than $0.5 million
During the fiscal years ended June 30, 2011 and June exposures include irrevocable commitments,
30, 2010, there were no inter-level transfers in the guarantees and repaying project preparation facilities.
derivatives portfolio.
Development credits are carried at amortized cost. Of
the total development credits outstanding as of June
Valuation Methods and Assumptions
30, 2011, 88.9% were to the South Asia, Africa, and
Derivative contracts include currency forward East Asia and Pacific regions, combined. Based on
contracts, plain vanilla swaps, and structured swaps, IDA’s internal credit quality indicators, the majority
and are valued using the standard discounted cash of the development credits outstanding are in the
flow methods using market observable inputs such as Medium risk and High risk categories.
yield curves, foreign exchange rates and basis
IDA’s development credits are predominantly
spreads.
denominated in SDR (94% as of June 30, 2011), and
carry original maturities greater than 35 years and a
NOTE E—DEVELOPMENT CREDITS AND
service charge of 75 basis points.
OTHER EXPOSURES
As of June 30, 2011, four borrowers with
IDA’s development credits and other exposures
development credits outstanding totaling $3,115
(exposures) are generally made directly to or are
million (representing about 2% of the portfolio) were
guaranteed by member countries of IDA. Other
in nonaccrual status.

Maturity Structure
The maturity structure of IDA’s development credits outstanding at June 30, 2011 and June 30, 2010 was as
follows:
June 30, 2011 June 30, 2010
a b
July 1, 2011 through June 30, 2012 $ 5,280 July 1, 2010 through June 30, 2011 $ 5,032
July 1, 2012 through June 30, 2016 15,872 July 1, 2011 through June 30, 2015 12,331
July 1, 2016 through June 30, 2021 25,329 July 1, 2015 through June 30, 2020 21,325
Thereafter 78,806 Thereafter 74,786
Total $125,287 Total $113,474
a. Includes development credits totaling $1,000 million prepaid by China on July 1, 2011. As of June 30, 2011, the funds
associated with these prepaid development credits had been received and the corresponding liability included in Accounts
payable and miscellaneous liabilities.
b. Includes $65 million and $1,537 million written off on July 1, 2010 and October 1, 2010, respectively, under the MDRI. These
amounts were based on June 30, 2010 exchange rates.
Currency Composition
IDA's development credits outstanding by currency composition at June 30, 2011 and June 30, 2010 comprised:
June 30, 2011 June 30, 2010
USD-denominated $ 7,190 $ 7,832
SDR-denominated 118,097 105,642
$125,287 $113,474
Credit Quality of Sovereign Development Credits purpose of analyzing the risk characteristics of IDA’s
exposures, exposures are grouped into three classes
Based on an evaluation of IDA’s development
in accordance with assigned borrower risk ratings
credits, management has determined that IDA has
which relate to the likelihood of loss: Low, Medium
one portfolio segment – Sovereign Exposures.
and High classes, as well as exposures in nonaccrual
Development credits constitute the majority of
status. IDA considers all exposures in nonaccrual
sovereign exposures.
status to be impaired.
IDA’s country risk ratings are an assessment of its
IDA’s borrowers’ country risk ratings are key
borrowers’ ability and willingness to repay IDA on
determinants in the provisions for development credit
time and in full. These ratings are internal credit
losses. Country risk ratings are determined in review
quality indicators. Individual country risk ratings are
meetings that take place several times a year. All
derived on the basis of both quantitative and
countries are reviewed at least once a year or more
qualitative analysis. To the extent applicable, the
frequently, if circumstances warrant, to determine the
components considered in the analysis can be
appropriate ratings.
grouped broadly into eight categories: political risk,
external debt and liquidity, fiscal policy and public IDA considers a development credit to be past due
debt burden, balance of payments risks, economic when a borrower fails to make payment on any
structure and growth prospects, monetary and principal, service, interest or other charges due to
exchange rate policy, financial sector risks, and IDA, on the dates provided in the contractual
corporate sector debt and vulnerabilities. For the development credit agreements.

The following table provides an aging analysis of IDA’s development credits as of June 30, 2011:
Days past due Up to 45 46-60 61-90 91-180 Over 180 Total Past Due Current Total
Risk Class
Low $ - $- $- $ - $ - $ - $ 9,239 $ 9,239
Medium - - - - - - 34,219 34,219
High 1 1 1 - - 3 78,711 78,714
Credits in accrual status 1 1 1 - - 3 122,169 122,172
Credits in nonaccrual
status 12 1 4 28 1,006 1,051 2,064 3,115
a
Total $13 $2 $5 $28 $1,006 $1,054 $124,233 $125,287
a. At amortized cost
Accumulated Provision for Losses on Provision for Debt Relief

Development Credits, Debt Relief (HIPC Debt
HIPC Debt Initiative and MDRI provisions are based
Initiative and MDRI) and Other Exposures
on quantitative and qualitative analyses of various
Provision for Losses on Development Credits and factors, including estimates of Decision Point and
Other Exposures Completion Point dates. These factors are reviewed
Management determines the appropriate level of periodically as part of the reassessment of the
accumulated provision for losses, which reflects the adequacy of the accumulated provision for debt
relief. Provisions are released as qualifying debt
probable losses inherent in IDA’s exposures.
Probable losses comprise estimates of losses arising service becomes due under the HIPC Debt Initiative
from default and nonpayment of principal amounts and are reduced by the amount of the eligible
development credits written off when the country
due, as well as present value losses. Management
reassesses the adequacy of the accumulated provision reaches Completion Point, and becomes eligible for
on a periodic basis and adjustments are recorded as a MDRI debt relief.
charge against or addition to income.
Changes to the accumulated provision for losses on development credits and other exposures, as well as the debt
relief under HIPC Debt Initiative and MDRI for the fiscal years ended June 30, 2011 and June 30, 2010 are
summarized below:
June 30, 2011 June 30, 2010
Develop- Debt relief Develop- Debt relief
ment under ment under
credits Other HIPC/MDRI Total credits Other HIPC/MDRI Total
Accumulated provision, beginning of the
fiscal year $ 1,224 $ 4 $ 7,724 $ 8,952 $ 1,240 $3 $ 9,337 $10,580
Increase (decrease) in provision, net 20 10 (74) (44) 43 1 (134) (90)
Development credits written off under HIPC - - (15) (15) - - (48) (48)
Development credits written off under MDRI - - (2,464) (2,464) - - (1,108) (1,108)
Translation adjustment 89 1 443 533 (59) - (323) (382)
Accumulated provision, end of the fiscal
year $ 1,333 $15 $ 5,614 $ 6,962 $ 1,224 $4 $ 7,724 $ 8,952
Composed of accumulated provision for
losses on:
Development credits in accrual status $1,135 $ 1,004
Development credits in nonaccrual status 198 220
Total $1,333 $ 1,224
Development credits, end of the fiscal year:
Development credits in accrual status $122,172 $109,331
Development credits in nonaccrual status 3,115 4,143
Total $125,287 $113,474

Reported as Follows
Balance Sheet Statement of Income
Accumulated Provision for
Losses on:
Accumulated provision for debt relief and Provision for debt relief and for losses on
Development Credits losses on development credits development credits and other exposures
Accumulated provision for debt relief and Provision for debt relief and for losses on
Debt Relief under HIPC/MDRI losses on development credits development credits and other exposures
Other Liabilities-Accounts payable and Provision for debt relief and for losses on
Other Exposures miscellaneous liabilities development credits and other exposures
Overdue Amounts credits and other exposures are placed into

nonaccrual status, unpaid service charges and other
It is the policy of IDA to place in nonaccrual status
charges accrued on development credits outstanding
all development credits and other exposures made to,
to the member are deducted from the income from
or guaranteed by, a member of IDA if principal,
development credits in the current period. Charge
service charges, or other charges with respect to any
income on nonaccrual exposures is included in
such exposures are overdue by more than six months,
income only to the extent that payments have actually
unless IDA’s management determines that the
been received by IDA. If collectability risk is
overdue amount will be collected in the immediate
considered to be particularly high at the time of
future. IDA considers the exposures in nonaccrual
arrears clearance, a borrowing member’s exposures
status to be impaired. In addition, if exposures by
may not automatically emerge from nonaccrual
IBRD to a member government are placed in
status. In such instances, a decision on the
nonaccrual status, all development credits and other
restoration of accrual status is made on a case-by-
exposures made to, or guaranteed by, that member
case basis, and in certain cases that decision may be
government will also be placed in nonaccrual status
deferred until a suitable period of payment or policy
by IDA. On the date a member’s development
performance has passed.
The following tables provide a summary of selected financial information related to development credits in
nonaccrual status as of and for the fiscal years ended June 30, 2011 and June 30, 2010:
Average Overdue amounts
Nonaccrual Recorded recorded Principal Provision for Provision for
a b c
Borrower Since investment investment Outstanding debt relief credit losses Principal Charges
Myanmar September 1998 $ 803 $ 790 $ 803 $ - $161 $ 289 $ 81

Somalia July 1991 455 446 455 429 5 167 70
Sudan January 1994 1,324 1,300 1,324 1,223 21 480 167
Zimbabwe October 2000 533 519 533 - 11 115 45
Total – June 30, 2011 $3,115 $3,055 $3,115 $1,652 $198 $1,051 $363
Total – June 30, 2010 $4,143 $3,222 $4,143 $2,601 $220 $ 936 $329
a. A credit loss provision has been recorded against each of the credits in nonaccrual status.
b. Represents the average for the fiscal years. For the fiscal year ended June 30, 2009: $3,047 million.
c. Credit loss provisions are determined after taking into account accumulated provision for debt relief.

2011 2010 2009
Service charge income not recognized as a result of
development credits being in nonaccrual status $23 $32 $21
During the fiscal year ended June 30, 2010, development credits increased by $17 million,
development credits to Guinea were placed into including $9 million that would have been accrued in
nonaccrual status resulting in the reduction of income the previous fiscal year had these credits not been in
from development credits by $9 million. nonaccrual status.
On April 21, 2011, Guinea cleared all of its overdue During the fiscal years ended June 30, 2011, June 30,
principal and charges due to IDA and the 2010, and June 30, 2009 no service charge income
development credits to Guinea were restored to was recognized on credits in nonaccrual status.
accrual status. As a result of this event, income from

Development Credits written-off under MDRI
The table below summarizes the eligible development credits written off under the MDRI during the fiscal years
ended June 30, 2011 and June 30, 2010:
Country Completion Point Date Write off amount Write off date
Development credits written off during the fiscal year ended June 30, 2011
Liberia June 29, 2010 $ 65 July 1, 2010
Democratic Republic of Congo July 1, 2010 1,614 October 1, 2010
Togo December 14, 2010 554 January 1, 2011
Guinea-Bissau December 16, 2010 231 January 1, 2011
$2,464
Development credits written off during the fiscal year ended June 30, 2010
Central African Republic June 30, 2009 $ 375 July 1, 2009
Haiti June 30, 2009 452 July 1, 2009
Afghanistan January 26, 2010 72 April 1, 2010
Republic of Congo January 27, 2010 209 April 1, 2010
$1,108
Guarantees Sale of Development Credits under buy-down

mechanism
Guarantees of $258 million were outstanding at June
30, 2011 ($279 million—June 30, 2010). This During the fiscal years ended June 30, 2011 and
amount represents the maximum potential June 30, 2010, there were no development credits
undiscounted future payments that IDA could be sold.
required to make under these guarantees, and is not
During the fiscal year ended June 30, 2009, two
included on the Balance Sheet. The guarantees
development credits with an outstanding nominal
issued by IDA have original maturities ranging
value of $70 million were sold for a present value
between 10 and 22 years, and expire in decreasing
equivalent of $27 million under the buy-down
amounts through 2026.
mechanism to the Global Program to Eradicate
At June 30, 2011, liabilities related to IDA’s Poliomyelitis Trust Funds, resulting in a $43 million
obligations under guarantees of $18 million (June write-off.
30, 2010—$18 million), have been included in
Segment Reporting
Accounts payable and miscellaneous liabilities on
the Balance Sheet. These include the accumulated Based on an evaluation of its operations,
provision for guarantee losses of $6 million (June management has determined that IDA has only one
30, 2010—$4 million). reportable segment.
During the fiscal years ended June 30, 2011 and Charge income comprises service charges and
June 30, 2010, no guarantees provided by IDA were interest charges on outstanding development credit
called. balances and guarantee fee income. For the fiscal
year ended June 30, 2011, charge income from one
country totaling $198 million was in excess of ten
percent of total charge income.

The following table presents IDA’s development credits outstanding and associated charge income as of and for
the fiscal years ended June 30, 2011 and June 30, 2010, by geographic region.

June 30, 2011 June 30, 2010
Development Credits Development Credits
Outstanding Charge Income Outstanding Charge Income
Africa $ 34,983 $241 $ 31,794 $205
East Asia and Pacific 22,212 157 19,996 148
Europe and Central Asia 8,240 59 7,290 57
Latin America and the Caribbean 1,745 12 1,422 11
Middle East and North Africa 3,958 29 3,731 29
South Asia 54,149 399 49,241 387
Total $125,287 $897 $113,474 $837

The table below presents the fair value of IDA’s development credits along with their respective carrying amounts
as of June 30, 2011 and June 30, 2010:
June 30, 2011 June 30, 2010
Carrying Carrying
Value Fair Value Value Fair Value
Net Development Credits Outstanding $118,368 $73,165 $104,556 $66,624

The fair values of development credits are calculated using market-based methodologies which incorporate the
respective borrowers’ Credit Default Swap (CDS) spreads and, where applicable, proxy CDS spreads.
NOTE F—AFFILIATED ORGANIZATIONS December 15, 2010.

IDA transacts with affiliated organizations as a Cumulative transfers and grants made to IDA as of
recipient of transfers and grants, administrative and June 30, 2011 were $13,660 million ($12,669
derivative intermediation services as well as through million—June 30, 2010). Details by transferor are as
cost sharing of IBRD’s sponsored pension and other follows:
postretirement plans.
Transfers and Grants Transfers Beginning of Transfers during End of
On October 8, 2010, IBRD’s Board of Governors from the fiscal year the fiscal year the fiscal year
approved an immediate transfer to IDA of $383 Total $12,669 $991 $13,660
Of which
million. This transfer was received by IDA on
from:
October 13, 2010.
IBRD 11,212 383 11,595
On December 13, 2010, IFC and IDA signed an IFC 1,300 600 1,900
agreement for IFC to provide a grant to IDA of $600
million. This grant was received by IDA on

Receivables and Payables
At June 30, 2011, and June 30, 2010, the total amounts receivable from or (payable to) affiliated organizations
comprised:
June 30, 2011
Pension and Other
Administrative Postretirement Derivative
Services Benefits transactions Total
Receivable from:
IBRD $ - $999 $ 9,886 $ 10,885
Payable to:
IBRD $(370) $ - $(9,893) $(10,263)

June 30, 2010
Pension and Other
Administrative Postretirement Derivative
Services Benefits transactions Total
Receivable from:
IBRD $ - $1,088 $4,087 $ 5,175
Payable to:
IBRD $(357) $ - $(4,144) $(4,501)
Administrative Services: The payable to IBRD held in trust by IDA and/or IBRD, and are held in a
represents IDA’s share of joint administrative separate investment portfolio which is not
expenses. The allocation of expenses is based upon commingled with IDA and/or IBRD funds, neither
an agreed cost sharing formula, and amounts are are they included in the assets of IDA.
settled quarterly.
Trust fund execution may be carried out in one of
During the fiscal year ended June 30, 2011, IDA’s two ways: Recipient-executed or IDA-executed.
share of joint administrative expenses totaled
Recipient-executed trust funds involve activities
$1,234 million ($1,150 million - fiscal year ended
carried out by a recipient third-party “executing
June 30, 2010 and $975 million - fiscal year ended
agency”. IDA enters into agreements with and
June 30, 2009).
disburses funds to such recipients, who then exercise
Pension and Other Postretirement Benefits: The spending authority to meet the objectives and
receivable from IBRD represents IDA’s net share of comply with terms stipulated in the agreements.
prepaid costs for pension and other postretirement
IDA-executed trust funds involve execution of
benefit plans, whose assets are held in an irrevocable
activities by IDA as described in relevant
trust. These will be realized over the life of the plan
administration agreements with donors which define
participants.
the terms and conditions for use of the funds.
Derivative transactions: These relate to currency Spending authority is exercised by IDA, under the
forward contracts entered into by IDA with IBRD terms of the administration agreements. The
acting as the intermediary with the market and executing agency services provided by IDA vary
primarily convert donors’ expected contributions in and include for example, activity preparation,
national currencies under the Sixteenth and prior analytical and advisory activities and project-related
replenishments of IDA’s resources into the four activities, including procurement of goods and
currencies of the SDR basket. services.
NOTE G—TRUST FUNDS ADMINISTRATION In some trust funds, execution is split between
Recipient-executed and IDA-executed portions.
IDA, alone or jointly with one or more of its
Decisions on assignment of funding resources
affiliated organizations, administers on behalf of
between the two types of execution may be made on
donors, including members, their agencies and other
an ongoing basis; therefore the execution of a
entities, funds restricted for specific uses in
portion of these available resources may not yet be
accordance with administration agreements with
assigned.
donors. Specified uses include, for example, co-
financing of IDA lending projects, debt reduction IDA also acts as financial intermediary to provide
operations for IDA members, technical assistance specific administrative or financial services with a
for borrowers including feasibility studies and limited fiduciary or operational role. These
project preparation, global and regional programs, arrangements include, for example, administration
and research and training programs. These funds are of debt service trust funds, financial intermediation
and other more specialized limited funds The following table presents the changes in
management roles. Funds are held and disbursed in Accumulated Other Comprehensive Income
accordance with instructions from donors or, in balances for the fiscal years ended June 30, 2011
some cases, an external governance structure or a and June 30, 2010:
body operating on behalf of donors. In millions of U.S. dollars
Revenues June 30,
2011 2010
During the fiscal year ended June 30, 2011, IDA Balance, beginning of the fiscal year $ 7,859 $13,783
recognized revenues for administration of trust funds Currency translation adjustments on
operations totaling $61 million ($60 million-fiscal functional currencies 9,935 (5,924)
Balance, end of the fiscal year $17,794 $ 7,859
year ended June 30, 2010 and $57 million-fiscal
year ended June 30, 2009). Revenues collected from
donor contributions but not yet earned by IDA
totaling $75 million at June 30, 2011 ($67 million— NOTE J—PENSION AND OTHER
June 30, 2010) are included in Other Assets and in POSTRETIREMENT BENEFITS
Accounts payable and miscellaneous liabilities, IDA and IBRD are jointly called The World Bank.
correspondingly, on the Balance Sheet. The staff of IBRD perform functions for both IBRD
and IDA, but all staff compensation is paid directly
Transfers Received
by IBRD. Accordingly, a portion of IBRD's staff and
Under the agreements governing the administration associated administrative costs is allocated to IDA
of certain trust funds, IDA may receive any surplus based on an agreed cost sharing ratio computed
assets as transfers upon the termination of these trust every year using various indicators. The
funds. In addition, as development credits are repaid methodology for computing this share ratio is
to trust funds, in certain cases they are transferred to approved by the Executive Directors for both
IDA. During the fiscal year ended June 30, 2011, institutions.
surplus funds received by IDA under these
IBRD, along with IFC and MIGA sponsor a defined
arrangements totaled $8 million ($6 million – fiscal
year ended June 30, 2010). benefit Staff Retirement Plan (SRP), a Retired Staff
Benefits Plan (RSBP) and a Post-Employment
NOTE H—DEVELOPMENT GRANTS Benefits Plan (PEBP) that cover substantially all of
their staff members.
A summary of changes to the amounts payable for
development grants is presented below: The SRP provides regular defined pension benefits
In millions of U.S. dollars and also includes a cash balance component. The
June 30, June 30, RSBP provides certain health and life insurance
2011 2010 benefits to eligible retirees. The PEBP provides
Balance, beginning of the fiscal certain pension benefits administered outside the
year $ 5,837 $ 5,652
SRP.
Commitments 2,793 2,583
a
Reclassification - (15) A June 30 measurement date is used for these
Disbursements (2,261) (2,124)
Translation adjustment 461 (259) pension and other postretirement benefit plans. All
Balance, end of the fiscal year $ 6,830 $ 5,837 costs, assets and liabilities associated with these
plans are allocated between IBRD, IFC, and MIGA
a. Reflects certain reclassifications with PPA grants in Other Assets based upon their employees’ respective participation
on the Balance Sheet.
in the plans.
For the fiscal years ending June 30, 2011 and June While IDA is not a participating entity to these
30, 2010, the commitment charge rate on the benefit plans, IDA shares in the costs and
undisbursed balances of IDA grants was set at nil reimburses IBRD for its proportionate share of any
percent. contributions made to these plans by IBRD, as part
NOTE I—ACCUMULATED OTHER of IBRD’s allocation of staff and associated
COMPREHENSIVE INCOME administrative costs to IDA based on an agreed cost
sharing ratio. During the fiscal year ended June 30,
Comprehensive income consists of net income/loss 2011, IDA’s share of IBRD’s costs relating to all the
and other gains and losses affecting equity that, three plans totaled $ 241 million ($167 million -
under U.S. GAAP, are excluded from net income fiscal year ended June 30, 2010 and $70 million -
(loss). For IDA, comprehensive income (loss) is fiscal year ended June 30, 2009).
comprised of net loss and currency translation
adjustments on functional currencies. These items The cost of any potential future liability arising from
are presented in the Statement of Comprehensive these plans would be shared by IBRD and IDA
Income. using the applicable share ratio. As of June 30, 2011,

the SRP had a positive funded status of $328 included in the investment portfolio, was negative
million and the RSBP had a negative funded status $128 million.
of $312 million. The funded status of the PEBP,
after reflecting the $426 million of assets which are
NOTE K—FAIR VALUE DISCLOSURES

The table below presents IDA’s estimates of fair value of its financial assets and liabilities along with their
respective carrying amounts as of June 30, 2011 and June 30, 2010.
2011 2010
Carrying Carrying
Value Fair Value Value Fair Value
Due from Banks $ 50 $ 50 $ 42 $ 42
Investments 29,818 29,818 26,014 26,014
Net Development Credits Outstanding 118,368 73,165 104,556 66,624
Derivative Assets
Investments 304 304 106 106
Other Asset/Liability Management 9,886 9,886 4,087 4,087
Investments 309 309 103 103
Other Asset/Liability Management 9,893 9,893 4,144 4,144

As of June 30, 2011 and June 30, 2010, IDA had no financial assets or liabilities measured at fair value on a non-
recurring basis.
For valuation methods and assumptions of the following items refer to the respective notes as follows:
Investments: See Note C
Derivative assets and liabilities: See Note D
Development Credits Outstanding: See Note E
Due from Banks: The carrying amount of unrestricted and restricted currencies is considered a reasonable estimate
of the fair value of these positions.

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IDAFinancial Statements June 2011

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International Development Association

Management’s Discussion & Analysis

MANAGEMENT’S DISCUSSION AND ANALYSIS

Section 2: DEVELOPMENT OPERATIONS 10

Section 3: DEVELOPMENT ACTIVITIES, PRODUCTS AND PROGRAMS 10

Section 4: FINANCIAL RESOURCES 16

Section 5: ALLOCATION OF RESOURCES 18

Section 6: MANAGEMENT OF INVESTMENT PORTFOLIO HOLDINGS 20

Section 7: FINANCIAL RISK MANAGEMENT 22

Section 8: FINANCIAL RESULTS 27

Section 9: CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES 29

Section 10: GOVERNANCE AND CONTROLS 30

LIST OF BOXES, TABLES AND CHARTS PAGE

2 IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011

IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011 3

Sources and Uses of Funds

Sources of Funds Uses of Funds

Transfers and grants from

Service and commitment charge

4 IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011

Funding Position Liquidity Position

Balance Sheet Analysis

Condensed Balance Sheets

IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011 5

0 5,000 10,000 15,000 20,000

Development Credits Outstanding

Subscriptions and Contributions Paid-In

6 IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011

Condensed Statements of Income

Effect of interest rates

Effect of Exchange rates of non-SDRs component currencies

IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011 7

Advance Commitment Scheme under IDA16

Composition of IDA16 Resources

8 IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011

As of or for the fiscal years ended June 30,

In millions of US dollars, except ratios and return data in percentages

Development Operations (Discussed in Section 2)

Balance Sheet (Discussed in Section 8)

Income Statement (Discussed in Section 8)

Funding Position (Discussed in Section 7)

Liquidity Position (Discussed in Section 7)

Months of average monthly gross disbursements covered by

IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011 9

10 IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011

3.5 Financing Categories 40%

IDA’s financing of its development operations in the 20%

Box 2: Financing Principles

IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011 11

12 IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011

Not considered sufficiently creditworthy to 75 nil

IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011 13

14 IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011

IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011 15

16 IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011

IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011 17

18 IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011

Box 3: IDA16 Policy Framework

IDA MANAGEMENT’S DISCUSSION AND ANALYSIS: JUNE 30, 2011 19